annual report 2009

DEEP SEA SUPPLY PlcANNUAL REPORT 2009

KEY FIGURES

Figures in USD 1000 22000099 22000088

PPRROOFFIITT AANNDD LLOOSSSS AACCCCOOUUNNTT

Sales - freight revenue 167 633 190 405

Gross profit 65 163 99 977

Gross profit margin 39 % 53 %

Operating profit 78 877 92 668

Operating profit margin 47 % 49 %

EBITDA 111 493 134 916

EBITDA margin 67 % 71 %

Profit before tax 43 210 50 294

Profit margin before tax 26 % 26 %

Profit 51 294 53 404

Profit margin 31 % 28 %

SSOOLLVVEENNCCYY AANNDD LLIIQQUUIIDDIITTYY

Cash 31 616 33 799

Book equity 163 994 112 221

Book equity margin 1) 21 % 14 %

Value adjusted equity 351 000 404 000

Value adjusted equity margin 2) 40 % 41 %

PPRROOFFIITTAABBIILLIITTYY

Average number of shares 129 965 126 864

Share price 31.12. 7,79 7,04

Earnings per share 0,40 0,42

Earnings per share diluted 0,40 0,42

Cash flow per share 0,70 0,75

VVEESSSSEELLSS AANNDD NNEEWWBBUUIILLDDIINNGGSS

Vessels in operation 22 20

Newbuildings 7 9

Definitions:

1) Total equity / Total assets

2)Value adjusted equity / Total value adjusted assets

1

DEEP SEA SUPPLY • ANNUAL REPORT 2009

left . . . . . . . . . Key figures

2 . . . . . . . . . Deep Sea Supply at a glance

. . . . . . . . .Fleet list

4 . . . . . . . . . ExistingVessels

5 . . . . . . . . . Newbuilding delivery

6 . . . . . . . . . Board of Directors

8 . . . . . . . . . Report from the Board

. . . . . . . . . Consolidated Financial Statements

16 . . . . . . . . . Consolidated balance sheet

17 . . . . . . . . . Consolidated income statement

18 . . . . . . . . . Consolidated statement of changes in equity

19 . . . . . . . . . Consolidated cash flow statement

21 . . . . . . . . . Notes to the consolidated financial statements

50 . . . . . . . . . Auditor´s report

52 . . . . . . . . . The largest shareholders

54 . . . . . . . . . Corporate governance

61 . . . . . . . . . Parent Company Financial Statements

CONTENTS

2

DEEP SEA SUPPLYATA GLANCE

Deep Sea Supply Plc (“DESSC” or the “Company”) is an

offshore supply company listed on Oslo Stock Exchange.The

company is incorporated in Cyprus.

StrategyThe Company intends to become one of the leading ownersand operators of supply vessels on a global basis.The Com-pany will primarily seek to obtain and maintain a charteringprofile with emphasis on the spot,medium and long termcontract markets for the medium and large AHTS andmedium to long term employment contracts for the smallAHTS and the PSVs (Platform SupplyVessel).The Company’sprimary aims are to meet the demand from the markets thatrequire modern and advanced offshore vessels.

The Company will focus on acknowledged Safety Stan-dards developed during recent years within the OffshoreMarine Industry world wide, and in particular in the NorthSea area.The top management is dedicated to supervise thatall personnel are well acquainted with HSE&Q standards andprocedures, and all efforts will be made to ensure that eachindividual has the preferred attitude and behaviour withrespect to safety matters and is carrying out the operations inaccordance with best practices.

Following 5 years with significant fleet growth, the Compa-ny’s management has for the past year focused on penetratingnew markets.This has resulted in a new office in Rio, Brazil fol-lowing the ordering of a large PSV to be built at STX Offs-hore Brasil S.A. Brazil is a large market for offshore supplyvessels and the market is expected to continue to grow consi-derably in the years to come.Other markets are being explo-red with the aim at becoming a local player in more marketswith a long term view.We believe this strategy will enhancemarket opportunities and ensure more stable future earnings.

DESSC will actively consider investments in the perspec-tive of providing financial returns to its shareholders.TheCompany will actively consider possibilities to participate inindustry consolidation,mergers and acquisitions, and will posi-tion itself to be part of such consolidation.

The Company will actively use the capital market whendoing investments, and does not intend to hold significantliquid reserves for investments. Retained earnings will, to theextent permitted under operational constraints, financialcovenants and with due regard to appropriate working capitalrequirements, be paid out as dividends.

Vessel operationThe Company had per 31 December 2009 a fleet consistingof 14 AHTS and 8 PSVs.At year-end the vessels operated inAfrica,Asia, South America and Europe.

In 2009, 2 newbuildings have been delivered; 1 AHTS fromJaya Shipbuilding & Engineering, Singapore and 1 AHTS fromABG Shipyard, India.

Please find a full presentation of the Company’s fleet ofvessels and newbuilding program on the next pages.

Management and employeesThe Company was established with the aim to employ andmaintain a small, focused and qualified management within thefollowing predefined core activities;

CharteringFinance,Accounts and Investor RelationsBusiness DevelopmentMonitoring and control of external technical/crew managers

The Company has focused its in-house resources on keycompetence within the above activities and purchases otherservices, such as technical management, crew management,and construction supervision from third party providers.

The Company is incorporated in Limassol, Cyprus.TheCompany has management companies in Limassol, Cyprus,Singapore, Brazil and Norway.As of year-end the current staffof the Company is 17 persons. During 2009 staff has increa-sed with 4 persons.

The Management team of the Company is as follows: (asfrom 1st April 2010)

Finn Amund Norbye, CEO – Chief Executive Officer:Finn Amund Norbye has a long and international career wit-hin shipping and finance.The last 4 years he was CFO in DeepSea Supply. From 2001-2006 he was CFO of Bergshav Mana-gement AS and from 1999-2001 he was Director and Headof Fortis Bank’s Shipping Division in Rotterdam. Prior to that,he worked 12 years with Christiania Bank’s Shipping depart-ment. From 1996-1999 he was head of the Bank’s ShippingDepartment in Singapore and from 1993-1996 he was Headof the Bank’s Shipping Department in London. Prior to joiningChristiania Bank,Mr.Norbye has worked with StorebrandFinans,Norges Eksportråd (Stockholm), Electrolux (Bangkok).Mr.Norbye holds a Masters degree (Siviløkonom) from Nor-wegian School of Economics and Business Administration(NHH) and Stockholm School of Economics.

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DEEP SEA SUPPLYATA GLANCE • ANNUAL REPORT 2009

Espen Skadal, CFO – Chief Financial Officer:Espen Skadal has an extensive experience from differentinvestment and financing functions. From 2006-2010 he wasInvestment Director in Agder Energi AS and in charge of thecorporate M&A activities and MD of Agder EnergiVenture AS.From 1997-2006 he worked as Portfolio Manager and Invest-ment Analyst in Orkla ASA Investment Division, including 3,5years in Orkla Swiss Branch. From 1994-1997 he worked inDnBNOR as management trainee and account manager inthe Oil&Gas department. Skadal holds an MBA in Financefrom the Norwegian School of Economics and BusinessAdministration (NHH), and is a Chartered Financial Analyst(CEFA/AFA) and Certified Portfolio Manager.

Olaf Hafredal, CCO – Chief Chartering Officer:Olaf Hafredal has a long and extensive experience from theoffshore supply chartering business and has been Chief Char-tering Officer with Deep Sea Supply since 2005. From 1971to 1990, he worked as shipbroker with Johan G.Olsen Ship-brokers AS,most of the time with the offshore departmentwhich he managed from 1982. In 1990 he joinedViking Supply

Ships AS as chartering manager.WhenViking Supply Shipssold its supply fleet to Sævik Supply ASA at the end of 1996,he followed the fleet and worked as chartering manager forSævik Supply until the same fleet was sold on toTrico SupplyASA.Mr. Hafredal then started as chartering manager forTrico Supply, a position he hold until 2004. Before joiningDeep Sea Supply ASA,Mr. Hafredal worked as charteringmanager for Havila Shipping.

Espen Sørensen,Technical Director:Espen Sørensen has a long and extensive experience from theoffshore supply business. From 1991 to 2004 he workedonboard offshore supply vessels and tankers, the last 8 yearsas a Chief Engineer mainly on large anchor handlers withTricoSupply ASA and from 2000 withViking Supply Ships AS. In2004 he joined a position asTechnical Superintendent inViking Supply Ships AS,were he also was responsible for newbuilding projects. Before joining DESS in 2007 Mr. Sørensenworked as aTechnical Superintendent inDFDS Lys Line Rederi A/S.

Existing Vessels Yard Built Type BHP/DWT

AHTS VESSELS

Sea Lion Havyard Leirvik 04.11.08 AHTS Havyard 842 17520 BHP

SeaTiger Kværner Leirvik 1998 AHTS KMAR 404 15000 BHP

Sea Lynx Kværner Leirvik 1999 AHTS KMAR 404 15000 BHP

Sea Panther Kværner Leirvik 1999 AHTS KMAR 404 15000 BHP

Sea Leopard Kværner Kleven 1998 AHTS KMAR 404 15000 BHP

Sea Bear Kværner Kleven 1999 AHTS KMAR 404 15000 BHP

SeaWolf 1 Kværner Leirvik 1999 AHTS KMAR 404 15000 BHP

Sea Cougar Kværner Leirvik 1999 AHTS KMAR 404 16000 BHP

Sea Cheetah Jaya Shipbuilding 25.01.07 AHTS Khiam Chuang 15000 BHP

Sea Jaguar Jaya Shipbuilding 06.07.07 AHTS Khiam Chuang 15000 BHP

Sea Eagle 1 Jaya Shipbuilding 20.04.09 AHTS Khiam Chuang 12000 BHP

Sea Ocelot Jaya Shipbuilding 01.10.07 AHTS Khiam Chuang 10800 BHP

Sea Otter ABG Shipyard Ltd 17.08.07 AHTS Seatech P-729 6500 BHP

SeaWeasel ABG Shipyard Ltd 29.10.09 AHTS Seatech P-729 6500 BHP

PSVs

SeaTrout Karmsund Maritime Services 18.06.08 VS 470 MK II 3300 DWT

Sea Halibut Cochin Shipyard Ltd 27.04.07 PSV UT 755 L 3250 DWT

SeaAngler Cochin Shipyard Ltd 19.07.07 PSV UT 755 L 3250 DWT

Sea Pike Cochin Shipyard Ltd 10.10.07 PSV UT 755 L 3250 DWT

Sea Bass Cochin Shipyard Ltd 18.01.08 PSV UT 755 L 3250 DWT

Sea Pollock Cochin Shipyard Ltd 30.04.08 PSV UT 755 L 3250 DWT

SeaTurbot Cochin Shipyard Ltd 20.08.08 PSV UT 755 L 3250 DWT

SeaWitch Cochin Shipyard Ltd 17.12.08 PSV UT 755 L 3250 DWT

FLEET LIST AS PER 29 MARCH 2010

4

FLEET LIST • ANNUAL REPORT 2009

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

2010 2011 2012

Vessel no

270

271

272

273

274

275

28

Vessel Yard Type Date

AHTS VESSELS

Sea Marten ABG AHTS Seatech P-729 May 10

Sea Fox ABG AHTS Seatech P-729 Aug 10

Sea Jackal ABG AHTS Seatech P-729 Sep 10

Sea Badger ABG AHTS Seatech P-729 Oct 10

SeaVixen ABG AHTS Seatech P-729 Nov 10

Sea Stoat ABG AHTS Seatech P-729 Dec 10

PSV VESSELS

TBN STX STX PSV 09 CD Jan 12

NEWBUILDING DELIVERY

5

6

BOARD OF DIRECTORS

Svein AaserBorn 1946Chairman since 2007

Other board assignments:VM-2011,Holmenkollen (chairman)National Museum of Norway (chairman)Aktiv Kapital (director)J.P.Morgan, European Advisory CouncilLaerdal Medical AS (director)

Education:Master of business administrationNorges Handelshøyskole (NHH),Bergen and IMEDE, Lausanne.

Shares in Deep Sea Supply Plc per31.12.2009: 65 000

Bjørn GiæverBorn 1967Director since 2007

Other board assignments:None

Education:Bachelor of Science in InternationalBusiness from Norway and Japan

Shares in Deep Sea Supply Plc per31.12.2009:None

Frixos SavvidesBorn 1951Director since 2007

Other board assignments:Frontline Ltd.Golar LNG Ltd.3D Global Financial Services Ltd.Trust International Insurance Co.(Cyprus) Ltd (chairman)

Education:Fellow of the Institute of CharteredAccountants in England andWales.


Anna Cecilie HolstBorn 1954Director since 2004

Other current boardassignments:OptimumASAScandinavian Asset Management AS

Education:Lic.Oec.HSG (University of St. Gallen)CEFA (Norwegian School of Economicsand Business Administration)

Shares in Deep Sea Supply Plc per31.12.2009: 64,628

Kathrine FredriksenBorn 1983Director since 2009

Other current boardassignments:Frontline Ltd.Golar LNG Ltd.SeadrillIndependentTankers Corporation Ltd.

Education:European Business School London2002-2005


ANNUAL REPORT 2009

8

REPORT FROMTHE BOARD – the financial year 2009

Deep Sea Supply PLC (“Deep Sea Supply”,“DESSC” orthe “Company” on a consolidated basis) achieved in 2009operating revenues of USD 167.6 mill, EBITDA of USD 111.5mill, EBIT of USD 78.9 mill and a pre-tax profit of USD 43.2mill. Net result after taxes was USD 51.3 mill or USD 0.40 pershare.The book equity at the turn of the year was USD 164.0mill.

Company backgroundDeep Sea Supply is a Cyprus based offshore supply com-

pany with a modern fleet of anchor handling tug and supplyvessels (“AHTS”) and platform supply vessels (“PSVs”) oper-ating world-wide.The Company owned as per 31 December2009 a fleet of 14 AHTS and 8 PSVs in operation, 6 newbuild-ing contracts for AHTS and 1 newbuilding contract for PSV.

The parent company is domiciled in Limassol, Cyprus andthe Company has management companies in Cyprus andNorway and a representative office in Singapore.The totalnumber of employees at year-end was 17.

Deep Sea Supply is listed on Oslo Stock Exchange withthe ticker code “DESSC”.

Company strategy and operationsThe Company’s vision is to become one of the leading off-shore supply vessel companies on a global basis.

The business model has been to maintain a small staff of keyemployees and to outsource the technical and crew manage-ment of the vessels to external professional ship managementcompanies.The crew onboard the vessels are henceemployed by the management companies and are notemployees of the Company.

The Company focuses on the following main activities;• Chartering of the vessels• Business development• Investor relations / finance / accounting• Monitoring of performance of the external technicalmanagement companies

The Company maintains an open and transparent informationstrategy.

2005-2009 – A period of significant growthDeep Sea Supply became operational in July 2005 throughthe acquisition of 6 large AHTS vessels fromTidewater andwas listed on Oslo Stock Exchange in September same year.The vessels acquired were all built 1998/99 at Norwegianshipyards.The later expansion has mainly taken place throughacquisition of shipbuilding contracts.The most significanttransaction was made in April 2006 when the Companyacquired 22 newbuilding contracts from Seatankers Manage-ment Co. Ltd. at yards in Singapore and India. Later, the Com-pany acquired another 5 shipbuilding contracts at Norwegianand Singaporean shipyards.

The fleet consists of 22 vessels in operation by end of2009. In addition, the Company has 6 AHTS vessels underconstruction in India with expected deliveries in 2010 and 1PSV in Brazil with expected delivery in 2012.

Vessel operations and managementThe vessels operate world-wide and by end of 2009, the ves-sels operated in the following geographical areas;

North Sea: 5 vesselsWest Africa: 2 vesselsMediterranean: 7 vesselsAsia/Australia: 7 vesselsSouth America: 1 vessel

The chartering/marketing activities are performed fromoffices in Singapore, Brazil and Norway.

Of the 22 vessels, 16 vessels had Cyprus flag and 6 vesselshad Norwegian flag.The NOR flagged vessels are primarilycrewed with Norwegians and EU seafarers.The Cyprusflagged vessels have full Filipino crew, a combination of Filipinocrew and European officers or a combination of Filipino andIndonesian crew.

The external management companies responsible for thetechnical and crew management of the vessels areThomeOffshore (Singapore) and O S M (Norway).These companiesare supervised and monitored by the Company’s technicaldepartment. Deep Sea Supply’s maintenance philosophy isdoing proactive maintenance to ensure that the vessels aresafe and in good technical condition.At the same time,emphasis is made on maintaining low operating expenses.Thisis done by imposing restrictions on the managers, by betterplanning and control, by selecting the right crew etc. and thiswill be a continuous task.

Construction supervision at ABG Shipyard is carried outbyThome Offshore by a construction supervision teamlocated at the shipyard. Construction supervision at STX Off-shore Brasil S.A. will be performed by a combination of Com-pany’s employees and external consultants hired for thisspecific purpose.

Penetrating new marketsIn 2009, the Company commenced on a new strategy inorder to penetrate new markets for its fleet of vessels. In sev-eral of the interesting markets for offshore supply vessels,there are cabotage rules requiring local content in order toallow new companies/vessels entrance.Deep Sea Supply‘sstrategy is to work in order to enter the interesting marketsand take the necessary steps to comply with the differentrules that exist in the different markets that are viewed asinteresting.

One example of this strategy is Brazil, which is viewed as avery interesting market by the Company. In October 2009,the Company signed a shipbuilding contract with STX BrasilOffshore S.A. for a large PSV to be built in Brazil and to bedelivered in 1st quarter 2012.After the placement of thisorder, the Company established a shipowning company inBrazil as well as a ship management company in order toestablish and develop long term business in Brazil for thenewbuilding and the existing fleet of vessels.

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9

REPORT FROMTHE BOARD • ANNUAL REPORT 2009

The 2009 financial statements and certainmain risk factorsThe financial accounts are presented on a consolidated basis.The Board is of the opinion that the financial accounts presenta true and fair view about the development, profit and finan-cial condition of DESSC and consolidated at year end.

Going concernThe financial accounts are prepared on the going concernbasis.

Revenue and profitThe Company recorded freight revenues of USD 167.6

mill and vessels’ operating expenses of USD 66.2 mill. Otheroperating expenses (mainly general and administrativeexpenses for the offices in Cyprus, Singapore and Norway)were USD 7.7 mill.The Company’s revenues in 2009 were inUSD, EURO,NOK and GBP and the operating expenses weremainly in USD and NOK.The Company’s EBITDA was USD111.5 mill.

Normal depreciation of the vessels was USD 36.3 mill.Thevessels’ book values are depreciated to zero when the vesselsare 30 years old.TheVessels’ intermediate and major surveysare balanced and depreciated until the time for the next inter-mediate or major survey (approximately every 2,5 years).

Other gains included the following;(i) The Company sold its shares in CH Offshore in 3Q09 at

accumulated realized profits of USD 8.5 mill(ii) Deferred gain amortized in the period was USD 9.2 mill.

This is related to gain on sale and finance lease back ofvessels to Ship Finance International in 2007 and 2008where the gain on sale is recorded as revenue over aperiod of 12 years.

(iii) Change of the value of financial derivatives of USD 3.7mill.

Finance costs:Financial expenses were USD 28.0 mill and unrealisedexchange losses were USD 7.2 mill.The unrealised exchangelosses were mainly due to the currency translation of borrow-ings made in Norwegian Kroner against the US Dollar.

Taxes:In 2007 the Company recognized an amount (USD 8.1 mill)as taxes payable following the transition rules from the old taxregime to the new tonnage tax system adopted by the Gov-ernment.

After a High Court decision in Norway,made at 12th ofFebruary 2010, it was concluded that the transition ruleswere in breach of the constitution, paragraph 97.

Following this decision,The Company has decided toreverse the provision made in 2007 and to recognize the taxalready paid in 2008 and 2009 as a receivable in the balancesheet.

The impact on the results of 2009 is:The equity has improved by USD 8.1 mill (NOK 46.6 mill), lia-bilities has been reduced by USD 6.5 mill (NOK 37.6 mill) andassets have increased by USD 1.6 mill (NOK 9.1 mill), whichcorresponds to taxes already paid.

The profit and loss has been impacted positively by USD 8.1mill, or USD 0.06 per share.This has been recognized in Quar-ter 4, 2009.

Net income after taxes was USD 51.3 mill.

Dividend policy and distributions made in 2009The Company intends to actively use the capital market whendoing investments, and does not intend to hold liquid reservesfor significant investments. Retained earnings will, to the extentpermitted under operational constraints, financial covenants andwith due regard to appropriate working capital requirements,be distributed to shareholders as dividend.

For 2009, no dividend distributions were made due to theadverse market conditions resulting in lower utilization and ratelevels for AHTS and PSVs after the financial turmoil and further-more the lack of visibility in the equity markets.

Vessel revenues and net result – development during the yearThe lower level of activity in the offshore sector combined withmany deliveries of new offshore supply vessels have resulted inlower rates internationally and more commercial offhire in theoffshore supply sector.The North Sea spot market was veryweak towards the end of the year.

Total revenues from the AHTS vessels in 2009 reduced by28% compared to 2008.The reduction was mainly due to (i)lower rates (especially in the North Sea spot market), (ii) lowercommercial utilization and (iii) weaker currencies (Euro andGBP against USD).This impact was partly offset by the impactof newAHTS vessels and lower technical offhire.

Total revenues from the PSVs in 2009 increased by 38%compared to the same period in 2008.The increase was mainlydue to revenues from new vessels.

Vessel’s operating expenses in 2009 were USD 66.1 millcompared to USD 60.2 mill in 2008.Adjusting for fleet growth,the operating expenses were reduced by 7%, a reduction of 9%for the AHTS vessels and an increase of 2% for the PSVs.

Balance sheetTotal assets were USD 794.1 mill consisting mainly of (i) thebook value of vessels (ii) the 6 vessels in the mentioned sale &leaseback transactions with Ship Finance International and (iii)construction contracts (new-buildings) which include all pay-ments made to the shipyards on the 7 new-building contracts.

Bank deposits at year end were USD 31.6 mill.

Book value of vessels and newbuildings - impairmentsThe market value of vessels was reduced in 2009.The Com-pany has obtained independent assessments from external bro-kers and tested all vessels for possible impairment. Due toreduced market valuation, vessels under sale and leasebackwere written down by USD 33.4 mill in 2009.

The impact on 2009 accounts is a reduction in the bookvalue of the vessels and a reduction in deferred gain and noimplications on the P&L.The onward effect on the P&L will bereduced gain on sale (approx. USD 3.4 mill. p.a.) and reduceddepreciations (approx. USD 1.7 mill p.a.).

10

Trade and other receivablesTotal receivables from customers were USD 22.5 mill, whichis a significant reduction from USD 47.9 mill by the end of2008.This is due to improved internal routines and lower rev-enues. Of the total receivables, 85% was less than 1 monthold and 14% between 1 and 4 months old.

CIRR LoansDuring 2008 the Group applied for Commercial Interest Ref-erence Rate (CIRR) loans from the Norwegian Export CreditAgency.The total loan amount was in NOK equivalent toUSD 54.5 mill.The duration of the loans are 12 years and thecash proceeds from the loans have been deposited in a fixeddeposit account with a Norwegian bank at a higher interestrate than that of the loans.The agreed period of the depositsis identical with the one of the loans.The loans and the inter-est thereof will be repaid from that account and the differ-ence has been recognized as deferred gain and will beamortized over the period of the life of the loans.

Deferred gainA gain from the sale of the vessels to Ship Finance Interna-tional Ltd. (in 2007 and 2008) of currently USD 57.3 mill hasbeen deferred in the balance sheet as liabilities (long andshort term), and will be amortized over the lease term whichis 12 years. In the balance, the seller’s credit is deducted fromthe gross long term debt related to the leasing transaction.

Financing – bank facility16 vessels are financed by a senior loan facility, of which USD285.9 mill was outstanding by the end of 2009.The loan has a15 years repayment profile for the new vessels and 10 yearrepayment profile for the 1998/1999-built vessels. Interests onthe loan facility are NIBOR / LIBOR plus a margin of 1.30%p.a.The senior loan facility is secured with a 1st priority mort-gage in the financed vessels.

Financing - Sale and leaseback transactionsIn August 2007,DESSC entered into a heads of agreementwith Ship Finance International Ltd. for a sale and leasebacktransaction which now include the vessels “Sea Cheetah”,“SeaJaguar”,“Sea Halibut” and “Sea Pike”.

In November 2007,DESSC entered another heads ofagreement with Ship Finance International for a sale andleaseback transaction of the AHTS vessels “Sea Bear” and “SeaLeopard”.The transaction was concluded in January, 2008.

The total amount outstanding for the two sale and lease-back transactions was USD 225.2 mill at 31 December 2009.

Capital expenditureAccording to the revised schedule received from the yard,DESSC will in 2010 take delivery of the remaining 6 AHTSvessels fromABG Shipyard, India. Capital expenditure per ves-sel is approx. USD 12 mill. Financing of all the 6 newbuildingsis included in the Company’s senior loan facility, but after thelast revision of the delivery schedule, the last 5 have nowexceeded the agreed availability period.The first of the 6 ves-sels will be delivered within the availability period, and theCompany expects to draw a loan of approx. USD 9.5 millfrom the banks for this vessel.

The Company aims to finance the newbuilding in Brazil locally.The process of obtaining allocation of funds and financing canonly be started after the shipbuilding contract is entered into.The process of financing the vessel is started and the Com-pany aims to have committed financing in place in 2011.

EquityShareholders’ equity at the start of 2009 was USD 112.2 millAt the end of 2009 the Company’s equity was USD 164.0.The increase of USD 51.8 mill in equity is mainly caused bythe year’s profit (USD 51.3 mill) and by an increase in otherpaid in capital by USD 0.5 mill.

ShareholdersHemen Holding Limited is the Company’s largest shareholderand holds just below 34.3% of the Company’s shares.

LiquidityTotal current assets at year end were USD 67.7 mill and shortterm debt (including short term portion of long term debt)was USD 56.0 mill.

Cash and cash flowThe Company’s cash balance by the end of 2009 was USD31.6 mill, compared to USD 33.8 mill by end of 2008.Thecash generated from operating activities after interests paidwere USD 89.7 mill, net cash from investing activities was -USD 61.0 mill. (acquisition of “Sea Eagle 1”,“SeaWeasel”, 1stinstalment to STX Brasil Offshore S.A. and expenses relatedto special surveys ), proceeds from borrowings related to“SeaWeasel”was USD 9.66 mill, repayment of debt was USD40.4 mill and the reduction in cash hence USD 2.1 mill.

Main risk factors and uncertaintiesA number of the Company’s vessels are in the spot market,on short or medium term charters and the earnings on thesevessels are hence sensitive to changes in the charter rates andutilization. Reduced charter rate can result in a drain of theCompany’s cash. Currently the Company has 7 newbuildingsunder construction and the Company is hence exposed todelays in deliveries which may impact future revenues. Fur-ther delays may result in delivery beyond the banks’ availabilitydate for financing.The Company is furthermore sensitive tochanges in interest rates as part of its NOK and USD loanshave floating interest.The current low rate levels in the off-shore supply market can cause further reductions in value ofvessels and as a consequence reduced financing of newbuild-ings and trigger the minimum value clauses on the loans.Thefinancial turmoil may also change the number of delivered off-shore supply vessels and rigs and floaters and hence affect thesupply and demand situation for the offshore supply sector.The banking sector is recovering although still suffering fol-lowing the international financial turmoil which still impactsnegatively on the international shipping/offshore banks’ abilityto lend money.

Financial risks

Liquidity and riskIn a long lasting and depressed freight market, the freight rev-enues can be lower than the Company’s operating and finan-cial / bareboat expenses and hence reduce the liquid meansof the Company.

11

REPORT FROMTHE BOARD • ANNUAL REPORT 2009

Yard riskThe Company has currently 7 vessels under construction attwo shipyards, 6 in India and 1 in Brazil.The Company is henceexposed to late or no delivery from shipyards.The Companyhas guarantees from the Seller of 6 of the newbuilding con-tracts that cover most of its exposure in the case of non deliv-ery from the shipyards.

Health, safety and environmentBy year end 2009, the Company’s staff increased to 17employees world-wide.The working environment is consid-ered good and all employees are encouraged to participate inthe development of his/her position and in the developmentof the Company.

14 of the employees are male and 3 female.The Companytreats men and women equal in the recruitment processes.

Technical management and crewing are outsourced toISM certified companies.

Emphasis is made on professionalism and adherence tonational and international laws and regulations by the suppli-ers delivering services to the Company. Efforts and initiativesto reduce accidents and pollution to the environment arecompulsory.

The Company’s vessels are engaged in sea transportationand hence at risk related to pollution of the environment.

The financial turmoil and shifting oil prices create uncertaintywith respect to the future offshore activity and hence thefuture rate levels for the offshore supply vessels.

The value of the Company’s assetsThe value of the Company’sVessels can reduce due tochanges in the demand and supply for offshore supply vessels.This can impact on the equity and the financing of the Com-pany.The recent international financial turmoil creates uncer-tainties about future market values and possible distressedsales can intensify this process.

Market risksSome of the Company’s vessels will be either in the spot orshort term charter markets. Reduced market rates mayhence reduce and negatively impact the Company’s freightrevenues and net profit.

Credit risksThe Company has entered into charter contracts and ishence subject to counterpart risks if some of the charterersdo not honour their charter obligations.The Company isfocused on entering into charter parties with financially solidcharterers.

12

All the vessels are in compliance with requirements issued byregulatory bodies and the risk of pollution is hence viewed aslimited.The Company has in 2009 taken several initiativestowards more environmentally friendly vessels and made sig-nificant investments to the benefit of the environment.

The Company’s shore based activities are consideredenvironmental friendly and normal for this type (office) activ-ity.

In 2008, the Company recruited a HSE Manager for thepurpose enhancing its focus on health, safety and the environ-ment.

Changes in the Board of Directors in 2009Kathrine Fredriksen entered the Board at the Annual GeneralMeeting in May 2009.There were no other changes to theBoard of Directors in 2009.

Share holdings of Board of DirectorsThe Chairman of the Board of Directors, Svein Aaser, had perend of the financial year 2009 a shareholding of 65,000 shares(constituting 0.05% of the outstanding shares).Also,DirectorAnna Cecilie Holst had per end of the financial year 2009 ashareholding of 64,628 shares (constituting 0.05% of the out-standing shares).None of the other Directors own any sharesin Deep Sea Supply Plc. For all members of the Board ofDirectors, their shareholding has been unchanged from year-end 2009 and until 15 April 2009.

Future outlookThe activity level amongst international oil companies is pick-ing up, which is positive for the demand for offshore supplyvessels.A significant number of new offshore supply vessels(and in particular AHTS) are expected to be delivered in2010, but also a significant number of vessels have left themarket.

The first quarter is normally a slow quarter, and rate levelsare expected to pick up somewhat during the year.As theworld economy picks up, the exploration activity is expectedto increase which again will increase the demand for AHTSand PSVs.

With respect to the North Sea, the spot market isexpected to remain weak in 2010. Internationally, we are

more optimistic and see more tenders which can lead tomore charter contracts at satisfactory levels.Also, the Com-pany will benefit from strategic moves made in Brazil andother countries, and expect increased utilization of the fleetdue to these recent initiatives.

Transaction between related partiesDESSC has entered into two sale and leaseback transactionswith Ship Finance International Limited (“SFI”) in 2007 and2008. SFI’s largest shareholder is Hemen Holding Ltd. who isalso DESSC’s largest shareholder.The sale and leasebacktransactions are done on fully competitive terms.

Tax issue 2006The Norwegian tax authorities have raised questions aboutthe 2006 tax return for the subsidiary Deep Sea Supply ASArelated to the sales price of the shipbuilding contracts thatwere sold to Cyprus subsidiaries later the same year andclaiming that the sales price should have been higher.TheCompany has explained and provided background for theterms of the sale and strongly disagree with theTax Authori-ties’ view.

Corporate GovernanceDESSC`s principles for Corporate Governance is based onthe “Norwegian Recommendation for Corporate Gover-nance”, revised October 21st 2009. Listed companies areexpected to comply with Corporate Governance recommen-dations that regulate the division of roles between Sharehold-ers, the Board of Directors and the Executive Managementmore comprehensively than is required by applicable legisla-tion.The code of practice intends to strengthen the confi-dence in listed companies in order to provide the highestpossible value creation benefiting shareholders, employeesand others.As long as DESSC remains listed in the Oslo StockExchange, the "Norwegian Recommendation for CorporateGovernance" can be applicable to the Company as long as therecommendations do not contravene Cyprus Companies law.DESSC’s Corporate Governance report is included in theAnnual Report.

In accordance with new principles for good corporate

13

DEEP SEA SUPPLYATA GLANCE • ANNUAL REPORT 2009

governance,DESSC established in 2008 an Audit Committee.The audit committee is responsible for the financial reportingprocesses and quality. Prior to each reporting period,meet-ings between the management, the auditors and the auditcommittee are held.

Important events after the year endIIn March 2010, the Company was awarded two charter con-tracts with Petrobras for the AHTSs “Sea Otter” and “SeaMarten” in Brazil.This is a significant breakthrough for theCompany in one of the most exciting and fastest growingOSV markets in the world.The company established ashipowning company and a management company in Rio deJaneiro in 2009, and an area manager was employed in 2010in order to handle future operations in this market.

In February 2010,DESSC entered into a senior loan facil-ity for a separate financing of the “Sea Eagle”.

In March 2010,Mr.Odd Brevik retired and resigned asCEO of the Company. Finn Amund Norbye was appointed asthe new CEO and Espen Skadal was employed as the newCFO.

The Board would like to express their appreciation to Mr.Brevik for his hard effort for the Company.Mr. Brevik wasinstrumental in establishing the Company in 2005 and indeveloping the Company to its current position.

Statement of the members of the board ofDirectors and other responsible persons for thefinancial statementsIIn accordance with Article 9, sections (3) (c) and (7) of theTransparency Requirements (Securities forTrading on Regu-lated Market) Law of 2007 (“Law”), we the members of theBoard of Directors and other responsible persons of DeepSea Supply Plc for the year ended 31 December 2009 con-firm that to the best of our knowledge:

A) The annual consolidated financial statements that are pre-sented on pages 16 to 49:

(i) were prepared in accordance with the InternationalFinancial Reporting Standard as adopted by the EuropeanUnion, and in accordance with the provisions of Article 9,section (4) of the Law, and

(ii) give a true and fair view of the assets and liabilities, thefinancial position and the profit or losses of Deep Sea Sup-ply Plc and the businesses that are included in the consoli-dated accounts as a total, and

B)The Directors’ Report gives a fair review of the develop-ments and the performance of the business as well as thefinancial position of Deep Sea Supply Plc and the busi-nesses that are included in the consolidated accounts as atotal, together with a description of the principal tasks anduncertainties that they are facing.

Limassol, 14April 2010The Board of Deep Sea Supply PLC

Svein Aaser Frixos Savvides Kathrine FredriksenChairman

Anna Cecilie Holst Bjørn Giaever

Finn Amund Norbye Espen SkadalChief Executive Officer Chief Financial Officer

CONSOLIDATED BALANCE SHEET

16

(all amounts in thousands of United States Dollars). Year ended 31 December

Note 2009 2008ASSETSNon-CurrentAssetsProperty, plant and equipmentVessels 6 414 340 369 404Vessels under finance lease contracts 6 236 197 285 285Vessels under construction 6 26 327 31 735Equipment and vehicle 6 65 95Total property, plant and equipment 676 930 686 520

CIRR Deposit 14 49 426 44 799Total non-current assets 726 356 731 319

Current assetsCIRR Deposit short term portion 14 5 038 4 144Inventories 10 2 221 878Trade and other receivables 9 22 483 47 866Other short term receivables 26 6 349 6 172Financial assets at fair value through profit and loss 8 0 6 335Cash and cash equivalents 11 31 616 33 799Total current assets 67 707 99 195

Total assets 794 063 830 515

EQUITYCapital and reserves attributable to equity holders of the companyShare capital 12 2 599 2 599Share premium 16 203 16 203Treasury shares -9 787 -9 787Other paid in capital 1 720 1 242Retained earnings and currency translation reserves 153 259 101 965Total equity 163 994 112 221

LIABILITIESNon-current liabilitiesBank borrowings 14 260 698 266 998Finance lease liability 14 210 901 225 199CIRR Loan 14 49 374 44 799Deferred gain on sale and finance leaseback 51 486 90 752Deferred gain on CIRR Loan 1 571 1 426Long term tax liability 0 5 336Pension scheme 7 79 30Total non-current liabilities 574 109 634 541

Current liabilitiesTrade and other payables 13 3 588 25 039Current income tax liabilities 0 667Bank borrowings 14 25 207 23 724Finance lease liability 14 14 298 15 495CIRR Loan 14 5 038 4 144Deferred gain on sale and finance leaseback 5 830 9 201Deferred gain on CIRR Loan 14 229 229Financial derivatives 8 1 770 5 254Total current liabilities 55 959 83 752

Total liabilities 630 067 718 294

Total equity and liabilities 794 063 830 515

17

CONSOLIDATED INCOME STATEMENT

(all amounts in thousands of United States Dollars)

Note 2009 2008Sales - freight revenue 167 633 190 405Operating expenses vessels -66 163 -60 199Depreciation related to vessels 6 -36 308 -30 230Gross Profit 65 163 99 977Other depreciation 6 -60 -47Administrative expenses -7 696 -7 971Other (losses)/gains - net 17 21 470 708Operating profit 78 877 92 668Finance income 21 665 2 122Finance costs 21 -36 332 -44 496Finance costs - net -35 667 -42 374Profit before income tax 43 210 50 294Income tax expenses 15 8 084 3 110Profit for the year 51 294 53 404

Attributable to:-Equity holders of the company 51 294 53 404-Minority interest 0 0

51 294 53 404

Earnings per share for profit attributable to the equity holders of the company, expressed in USD per shareUSD per share USD per share

-Basic 22 0,40 0,42-Diluted 22 0,40 0,42

STATEMENT OF COMPREHENSIVE INCOME Year ended 31st December2009 2008

Profit for the year 51 294 53 404Other comprehensive incomeCurrency translation differences (Note 2.9(a)) 0 -15 259Total comprehensive income for the year 51 294 38 145

CONSOLIDATED STATEMENT OF COMPEHENSIVE INCOME


CONSOLIDATED FINANCIAL STATEMENTS • ANNUAL REPORT 2009

18

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


ShareCapital

Reverseacquisitionreserves

Sharepremiumreserves

Treasuryshares

Otherpaid-in-equiy

Retainedearnings

Currencytranslationdifferences Total

Balance at 1 January 2008 2 639 -123 386 190 334 -9 787 231 95 085 8 138 163 254Comprehensive income

Profit 53 404 53 404Other comprehensive income

Currency translation differences -15 259 -15 259Total comprehensice income 0 0 0 0 0 53 404 -15 259 38 145Transactions with ownersCancelation of own shares (non traded) -40 -40Value of share option scheme, issued in December 2007 1 011 1 011

Payment of dividend -50 746 -39 404 -90 150Total transactions with owners -40 0 -50 746 0 1 011 -39 404 0 -89 180Balance at 31 December 2008 2 599 -123 386 139 589 -9 787 1 242 109 085 -7 120 112 221

Balance at 1 January 2009 2 599 -123 386 139 589 -9 787 1 242 109 085 -7 120 112 221Comprehensive incomeProfit 51 294 51 294Other comprehensive incomeCurrency translation differences 0 0Total comprehensive income 0 0 0 0 0 51 294 0 51 294Transaction with ownersValuation of share option scheme 478 478Total transactions with owners 478 478Balance at 31 December 2009 2 599 -123 386 139 589 -9 787 1 720 160 379 -7 120 163 994

CONSOLIDATED FINANCIAL STATEMENTS • ANNUAL REPORT 2009

19

CONSOLIDATED CASH FLOW STATEMENT

Year ended 31 DecemberNote 2009 2008

Cash flows from operating activitiesCash generated from operations 23 110 598 126 463Interest paid -20 911 -38 351Net cash generated from operating activities 89 687 88 112

Cash flow from investing activitiesAcquisitions of vessels and constructions contracts -61 052 -133 088Disposals of vessels and construction contracts 0 58 611Net Cash used in investing activities -61 052 -74 447

Cash flows from financing activitiesPayment of dividend to shareholders 0 -140 896Proceeds from borrowings 9 660 430 099Repayments of borrowings -40 478 -300 435

Net cash from financing activities -30 818 -11 232

Total changes in liquidity in the year -2 183 2 403

Cash and cash equivalents at beginning of year 33 799 31 396

Cash and cash equivalents at end of the year 11 31 616 33 799


21

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS • ANNUAL REPORT 2009

Deep Sea Supply PLC’s (“the Company”) and subsidiaries,hereinafter collectively “the Group’s”, principal activities areto engage and invest, directly or indirectly, by itself or throughsubsidiaries or part-owned companies, partnerships or otherforms of entities, in the international offshore supply vesselbusiness.

The Company was incorporated as a public limited liabilitycompany on 7 November 2006 and is domiciled in Cyprus inaccordance with the provisions of the Companies Law,Cap.113. Its registered office is at John Kennedy, Iris House, 7thFloor, Limassol, Cyprus.

The Company was established for the purpose of acqui-ring all shares of Deep Sea Supply ASA.

The Company has its primary and only listing on the OsloStock Exchange.

These consolidated financial statements have been appro-ved for issue by the Board of Directors on 14 April 2010.

1. General information

2.1 Statement of compliance andbasis of preparation

These consolidated financial statements have been preparedin accordance with, and comply with, International FinancialReporting Standards as adopted by the EU; the requirementsof the Cyprus Companies Law,Cap. 113; and the regulationsof Oslo Stock Exchange..

The consolidated financial statements have been preparedunder the historical cost convention, as modified by therevaluation of financial assets and liabilities, including derivativeinstruments at fair value through profit or loss. The financialstatements have been prepared under the assumption thatthe company is a going concern. A summary of the principalaccounting policies applied in the preparation of theseconsolidated financial statements are set out below. Thesepolicies have been consistently applied to all the yearspresented, unless otherwise stated.

The preparation of financial statements in conformity withIFRS requires the use of certain critical accounting estimates.It also requires management to exercise its judgment in theprocess applying the Company’s accounting policies. Theareas involving a higher degree of judgment or complexity, orareas where assumptions and estimates are significant to theconsolidated financial statements are disclosed in Note 4.

Basis of preparationThe financial statements of the Company have been preparedin accordance with International Financial Reporting Stan-dards (IFRS), as adopted by the European Union (EU), and therequirements of the Cyprus Companies Law,Cap. 113.

As of the date of the authorisation of the financial state-ments, all International Financial Reporting Standards issuedby the International Accounting Standards Board (IASB) thatare effective as of 1 January 2009 have been adopted by theEU through the endorsement procedure established by the

2. Summary of significant accounting policies

Notes to the consolidated financial statements

22

European Commission, with the exception of certain provi-sions of IAS 39 “Financial Instruments: Recognition and Meas-urement” relating to portfolio hedge accounting.

In addition, the following interpretations have beenendorsed, however their effective dates are not the same,although an entity may choose to early adopt them:

(i) IFRIC 12 “Service Concession Arrangements”;(ii) IFRIC 15 “Agreements for the construction of real estate”;

and(iii) IFRIC 16 “Hedges of a Net Investment in a Foreign

Operation”.

Adoption of new and revised IFRSsDuring the current year the Company adopted all the newand revised International Financial Reporting Standards (IFRS)that are relevant to its operations and are effective foraccounting periods beginning on 1 January 2009.This adop-tion did not have a material effect on the accounting policiesof the Company, with the exception of the following:

(i) IAS 1 (revised) “Presentation of financial statements”, as aresult of the adoption of which, the Company presents inthe statement of changes in equity all owner changes inequity, whereas all non-owner changes in equity are pre-sented in the statement of comprehensive income.Com-parative information has been re-presented so that it isalso in conformity with the revised standard.The change inthe accounting policy impacts only presentation aspects.

(ii) IFRS 7 “Financial Instruments-Disclosures” (amendment),as a result of the adoption of which, the Company pro-vides additional disclosures in relation to the fair valuemeasurements of its financial instruments by level of a fairvalue measurement hierarchy.

(iii) IAS 23 (revised) “Borrowing costs”, as a result of whichthe Company capitalises borrowing costs directly attribut-able to the acquisition, construction or production of aqualifying assets as part of the cost of that asset.The Com-pany previously recognized all borrowing costs as anexpense immediately.This change in accounting policy hasbeen made in accordance with the transitional provisionsof IAS 23 (revised) and therefore comparative figureshave not been restated.The Company has capitalised bor-rowing costs with respect to buildings under constructionwith commencement date 1 January 2009 and onwards.

(iv) IFRS 8 replaces IAS 14 “Segment reporting” and alignssegment reporting with the requirements of the US stan-dard SFAS131.The new standard requires a ‘managementapproach’ under which segment information is presentedon the same basis as that used for internal reporting pur-poses.This has not had a significant impact on the typeand manner of information disclosed.

At the date of approval of these financial statements the fol-lowing accounting standards were issued by the InternationalAccounting Standards Board but were not yet effective:

(i) Adopted by the European UnionNew standards

• IFRS 3 (Revised) “Business Combinations” (effective forannual periods beginning on or after 1 July 2009).

• IAS 27 (Revised) “Consolidated and Separate FinancialStatements” (effective for annual periods beginning on orafter 1 July 2009).

• IFRS 1 (Revised) “FirstTimeAdoption of InternationalFinancial Reporting Standards” (effective for annual peri-ods beginning on or after 1 July 2009).

Amendments• Annual improvements to IFRS (2008) re IFRS 5 “Non-cur-rent Assets Held for Sale and Discontinued Operations”(effective for annual periods beginning on or after 1 July2009).

• Amendment to IAS 39 “Financial Instruments: Recognitionand Measurement” on “Eligible Hedged Items” (effectivefor annual periods beginning on or after 1 July 2009).

• Amendment to IFRIC 9 and IAS 39 regarding embeddedderivatives (effective for annual periods beginning on orafter 30 June 2009).

• Amendments to IAS 32 “Financial Instruments: Presenta-tion: Classifications of Rights Issues” (effective for annualperiods beginning on or after 1 February 2010).

• Annual Improvements 2009 (effective for annual periodsbeginning on or after 1 July 2009 to 1 January 2010).

• Amendments to IFRS 2 “Group Cash-settled Share-basedPaymentTransactions” (effective for annual periods begin-ning on or after 1 January 2010).

New IFRICs• International Financial Reporting Interpretation Commit-tee (IFRIC) 12 “Service Concession Arrangements” (effec-tive for annual periods beginning on or after 1 January2008, EU: 30 March 2009).

• IFRIC 15 “Agreements for the Construction of RealEstate” (effective for annual periods beginning on or after1 January 2009, EU: 31 December 2009).

• IFRIC 16 “Hedges of a Net Investment in a Foreign Opera-tion” (effective for annual periods beginning on or after 1October 2008, EU: 30 June 2009).

• IFRIC 17 “Distributions of Non cash Assets to Owners”(effective for annual periods beginning on or after 1 July2009).

• IFRIC 18 “Transfers of Assets from Customers” (effectivefor annual periods beginning on or after 1 July 2009).

(ii) Not adopted by the European Union

New standards• IAS 24 (Revised) “Related Party Disclosures” (effective forannual periods beginning on or after 1 January 2011).

• IFRS 9 “Financial Instruments” (effective for annual periodsbeginning on or after 1 January 2013).

Amendments• Amendment to IFRIC 14 Prepayments of a MinimumFunding Requirement (effective for annual periods begin-ning on or after 1 January 2011).

• Amendments to IFRS 1 “Additional Exemptions forFirst-time Adopters” (effective for annual periods begin-ning on or after 1 January 2010).

• Amendment to IFRS 1 “Limited Exemption from Compar-ative IFRS 7 Disclosures for FirstTimeAdopters” (effectivefor annual periods beginning on or after 1 July 2010).

New IFRICs• IFRIC 19 “Extinguishing Financial Liabilities with EquityInstruments” (effective for annual periods beginning on orafter 1 July 2010).

The Board of Directors expects that the adoption of theseaccounting standards in future periods will not have a materialeffect on the financial statements of the Company.

2.2 Consolidation

Subsidiaries are those companies and other entities in whichthe Group, directly or indirectly, has an interest of more thanone half of the voting rights or otherwise has power to gov-ern the financial and operating policies so as to obtain eco-nomic benefits.The existence and effect of potential votingrights that are presently exercisable or presently convertibleare considered when assessing whether the Group controlsanother entity. Subsidiaries are consolidated from the date onwhich control is transferred to the Group (acquisition date)and are de-consolidated from the date that control ceases.

These consolidated financial statements are prepared fol-lowing the provisions of IFRS 3 “Business combination” forreverse acquisition. Deep Sea Supply PLC (“legal parent”)issued shares to acquire 93,8% of Deep Sea Supply ASA(“legal subsidiary”). For consolidation purposes, Deep SeaSupply ASA, is the acquirer and Deep Sea Supply PLC, is theacquiree.

The cost of the business combination is deemed to havebeen incurred by the legal subsidiary and is determined by thenumber of equity instruments Deep Sea Supply ASA wouldhave had to issue to provide the same percentage ownershipinterest of the combined entity to the owners of the Com-pany as they have in the combined entity as a result of thereverse acquisition.

These consolidated financial statements reflect the fair val-ues of the assets, liabilities and contingent liabilities of the legalparent. The cost of the combination is allocated by measuringthe identifiable assets, liabilities and contingent liabilities of thelegal parent at their fair values at the acquisition date. Anyexcess of the cost of the combination over the acquirer’sinterest in the net fair value of these items is accounted for asgoodwill. If the cost of the combination is less than the fairvalue of the net assets of the subsidiary acquired, the differ-ence is recognized directly in the income statement.

The owners of the legal subsidiary who do not exchangetheir equity instruments for equity instruments of the legalparent are treated as a minority interest. The minority share-holders have an interest only in the results and net assets ofthe legal subsidiary.The consolidated financial statements are issued under thename of the legal parent, the “Company” and are a continua-tion of the financial statements of the legal subsidiary. As aresult:

-The assets and liabilities of the legal subsidiary are recog-nized and measured at their pre-combination carryingamounts;-The retained earnings and other equity balances are theretained earnings and other equity balances of the legalsubsidiary immediately before the business combination;-The amount of issued equity instruments is determinedby adding to the issued equity of the legal subsidiaryimmediately before the business combination the cost ofthe combination determined as described in the para-graph above; and- Comparative information presented in the first year ofconsolidation is that of the legal subsidiary.

All intercompany transactions, balances and unrealised gainson transactions between group companies are eliminated;unrealised losses are also eliminated unless cost cannot berecovered.Where necessary, accounting policies for sub-sidiaries have been changed to ensure consistency with thepolicies adopted by the Group.

2.3 Underlying concepts

The financial statements are prepared on the going concernbasis using accrual accounting.

Assets and liabilities and income and expenses are not off-set unless specifically permitted by an accounting standard.

Financial assets and financial liabilities are offset and thenet amount reported only when a legally enforceable right toset off exists and the intention is either to settle on a net basisor to realize the asset and settle the liability simultaneously.

Changes in accounting policies are accounted for in accor-dance with the transitional provisions in the IFRS standards. Ifno such guidance is given, they are applied retrospectively,unless it is impracticable to do so, in which case they areapplied prospectively.

2.4 Recognition of assets andliabilities

Assets are only recognized if they meet the definition of anasset, it is probable that future economic benefits associatedwith the asset will flow to the group and the cost or fair valuecan be measured reliably.

2.5Valuation and classification ofassets and liabilities

Assets intended for long-term ownership or use are classifiedas non-current. Other assets are classified as current.Receivables due to be repaid within one year are classified ascurrent assets.

Non-current assets are stated at historic cost price, butwritten down to recoverable amount when the fall in value isconsidered to be permanent. Such write-downs are reversedwhen the reason for the write-down no longer applies. Fixedassets with a limited economic life are depreciated on astraight line basis.


23

(c) Group companiesThe results and financial position of all the group entities

(none of which has the currency of a hyperinflationary econ-omy) that have a functional currency different from the pres-entation currency are translated into the presentationcurrency as follows:(i) Assets and liabilities for each balance sheet presented are

translated at the closing rate at the date of that balancesheet;

(ii) income and expenses for each income statement aretranslated at average exchange rates (unless this average isnot a reasonable approximation of the cumulative effectof the rates prevailing on the transaction dates, in whichcase income and expenses are translated at the dates ofthe transactions).

(iii) All resulting exchange differences are recognized as a sep-arate component equity,.

2.6 Use of estimates

The key sources of estimation of uncertainty at the balancesheet date, that have a significant risk for causing a materialadjustment to the carrying amounts of assets and liabilitieswithin the next financial year are discussed below undersection 4.

2.7 Commercial Interest ReferenceRate (CIRR) loan

The Group has applied for two Commercial Interest Refer-ence Rate (CIRR) loans from the Norwegian Export CreditAgency in 2008.The duration of the loans may vary (DESSC12 years) and the cash proceeds from the loans have beendeposited in fixed deposit account with a Norwegian bank ata higher interest rate than that of the loans.The agreed periodof the deposits is identical with the one of the loans.The loansand the interest thereof will be repaid from that account.At initial recognition and the difference between theamounts received and fair value of the loan has been recog-nised as deferred gain and iswill be amortised over the periodof the life of the asset.

2.8 Segment reporting

Operating segments are reported in a manner consistentwith the internal reporting provided to the chief operatingdecision-maker.

The components of the Group that management uses tomake decisions about operating matters is the geographicalregion and the type of the vessel.A geographical segment isengaged in providing services within a particular economicenvironment that is subject to risks and returns that are differ-ent from those of segments operating in other economicenvironments.

The Group is organized into main geographic regionswhich are the primary business segments;North Sea,Mediter-ranean, Africa,Australia/Far East and North & South America.The geographical segments are based on the location of thevessels.

Secondary segment is the type of vessel – AHTS and PSV.Depreciation is allocated between the different segmentsbased on number of days the vessels have been operatedwithin the different segments.

The segment split of assets and liabilities at year end arebased on the location of the actual vessels on the balancesheet date.

2.9 Foreign currency translation

(a) Functional and presentation currencyDeep Sea Supply Plc, located in Cyprus, became the parentcompany of the Group with effect from 28 December 2006.As of 1 January 2007 the functional currency changed fromNorwegian Kroner (NOK) to USD as a lot of the underlyingtransactions changed from NOK to USD.The effect of thechange in functional currency is accounted for prospectively. Inother words the Group translates all items into the new func-tional currency (USD) using the exchange rate at the date ofthe change which was USDNOK 6,25.

24

As of 1 January 2009 the functional currency of the Norwe-gian entities changed from NOK to USD as a lot of the under-lying transactions changed from NOK to USD.As a result ofthis, all Group entities have the USD as their functional cur-rencies.

Items included in the financial statements of each of theCompany’s entities are measured using the currency of theprimary economic environment in which the entity operates(‘the functional currency’).The consolidated financial state-ments are presented in USD,which is the Company’s func-tional and presentation currency.

All amounts in these financial statements are in USD 1.000unless otherwise stated.

(b) Transactions and balancesForeign currency transactions are translated into the func-tional currency using the exchange rates prevailing at thedates of the transactions. Foreign exchange gains and lossesresulting from the settlement of such transactions and fromthe translation at year-end exchange rates of monetary assetsand liabilities denominated in foreign currencies are recog-nized in the income statement.

The exchange rate used throughout the Group at the bal-ance sheet date, compared to the USD,were as follows;

2009

Average 31.12

USDNOK 5,25 5,76

USDEUR 0,72 0,70

USDGBP 0,64 0,63

2008

Average 31.12

USDNOK 6,26 7,00

USDEUR 0,69 0,71

USDGBP 0,54 0,69

2.10 Non-current assets andmaintenance costsProperty, plant and equipment are stated at historical cost,less subsequent depreciation and impairment. For vesselspurchased, these costs include expenditures that are directlyattributable to the acquisition of the items. Depreciation iscalculated on a straight-line basis, taking residual values intoconsideration, and adjusted for impairment charges, if any.The carrying value of the fixed assets on the balance sheetrepresents the cost less accumulated depreciation and anyimpairment charges.

Subsequent costs are included in the asset’s carryingamount or recognized as a separate asset, as appropriate, onlywhen it is probable that future economic benefits associatedwith the item will flow to the Group and the cost of the itemcan be measured reliably.All other repairs and maintenanceare charged to the income statement during the financialperiod in which they are incurred.

Day-to-day maintenance costs are charged to the incomestatement during the financial period in which they areincurred. The cost of major renovations and periodic mainte-nance of vessels are capitalized and depreciated over the use-ful lifetime of the parts replaced. The useful lifetime of regularvessels docking expenses will normally be the period untilnext docking which is after 30 months.

Maintenance and classification costs for ships are capital-ized and charged to expenses over the period up to the nextoccasion when maintenance is carried out, normally 30months. When ships are acquired, a proportion of the acqui-sition cost is capitalized as periodic maintenance.

Depreciation on vessels and other assets (equipment) iscalculated using the straight-line methodto allocate their cost or re-valued amounts to their residualvalues over their estimated useful lives, as follows:

–Vessels 30 years–Vehicles 5 years– Dry docking costs 2.5 years– Furniture, fittings and equipment 3 years

The assets’ residual values and useful lifetime assumptions offixed-assets are reviewed at each balance sheet date, andwhere they differ significantly from previous estimates, depre-ciation charges are changed accordingly.

Gains and losses on disposals are determined by compar-ing the disposal proceeds with the carrying amount and areincluded in operating profit. For vessels under finance sale andleaseback disposals the deferred gain is recognized fully intothe profit and loss upon disposal.

2.11 New build contracts

Installments on new vessel contracts are presented as prepay-ments for vessels under construction in accordance with theterms of the vessel-contracts.The total acquisition costincludes the sum of instalments payable plus direct costsincurred during the construction period.

Prepayments are carried at cost less provision for impair-ment. A prepayment is classified as non-current when thegoods or services relating to the prepayment are expected to


25

be obtained after one year, or when the prepayment relatesto an asset which will itself be classified as non-current uponinitial recognition. Prepayments to acquire assets are trans-ferred to the carrying amount of the asset once the Grouphas obtained control of the asset and it is probable that futureeconomic benefits associated with the asset will flow to theGroup.Other prepayments are written off to profit or losswhen the goods or services relating to the prepayments arereceived. If there is an indication that the assets, goods orservices relating to a prepayment will not be received, the car-rying value of the prepayment is written down accordinglyand a corresponding impairment loss is recognised in profit orloss.

2.12 Lease agreements

The determination of whether an arrangement is, or containsa lease, is based on the substance of the arrangement andrequires an assessment of whether the fulfilment of thearrangement is dependent on the use of a specific asset orassets and the arrangement conveys a right to use the asset.

Leases in which a significant portion of the risks andrewards of ownership are retained by the lessor are classifiedas operating leases. Payments made under operating leases(net of any incentives received from the lessor) are chargedto the income statement on a straight-line basis over theperiod of the lease.

Financial leases, which transfer to the Company substan-tially all the risks and benefits incidental to ownership of theleased item, are capitalized at the inception of the lease at fairvalue of the leased asset or, if lower, at the present value of theminimum lease payments. Lease payments are apportionedbetween the finance charges and reduction of the lease liabil-ity so as to achieve a constant rate of interest on the remain-ing balance of the liability. Finance charges are charged directlyto financial expenses.

Capitalized leased assets are depreciated over the shorterof the estimated useful life of the asset and the lease term, ifthere is no reasonable certainty that the Company will obtainownership by the end of the lease term.

In a sale and finance leaseback transaction any excess ofsales proceeds over the carrying amount is deferred and rec-ognized in the income statement over the lease term.

2.13 Impairment of non-financial-current assets

The Company determines whether there are indications thatfixed non-financial assets are impaired at least on a quarterlybasis. The carrying value of vessels are reviewed for impair-ment when events or changes in circumstances indicate thatthe carrying value may not be recoverable .The asset’s cashgenerating ability either through use or sale is reviewed andcompared to the asset’s carrying value in the balance sheet. Ifthe carrying value is higher, the difference must be written offas an impairment loss. Fair value reduced by estimated salescosts is the amount achievable on an arm’s length sale to anindependent third party. The recoverable amount is thehigher of value in use and fair value less costs to sell and isestablished individually for all cash generating units. In assess-ing value in use, the estimated future cash flows are dis-

26

counted to their present value using a pre-tax discount ratethat reflects current market assessments of the time and therisk specific to the asset that is considered impaired.

A previously recognized impairment loss is reversed ifthere has been a change in the estimates used to determinethe recoverable amount. Reversal of previously recognizedimpairment is limited to the amount the carrying value of theasset would have been, had the initial impairment charge nottaken place.

For vessels that are held under a sale and finance lease-back arrangement that have a related carrying amount of anda deferred gain as explained in 2.12 above has been recog-nized; in cases uponof impairment the policy followed by theGroup is to recognizes the impairment first within theunamortized part of the deferred gain for the same asset thatis presented as a liability and any excess is charged to theincome statement.

A previously recognized impairment loss is reversed ifthere has been a change in the estimates used to determinethe recoverable amount. Reversal of previously recognizedimpairment is limited to the amount the carrying value of theasset would have been, had the initial impairment charge nottaken place.

2.14 Financial assetsThe Group classifies its financial assets in the following cate-gories: at fair value through profit or loss, loans and receiv-ables, and available for sale.The classification depends on thepurpose for which the financial assets were acquired.Manage-ment determines the classification of its financial assets at ini-tial recognition and re-evaluates this designation at everyreporting date.

(a) Financial assets at fair value through profit orlossThis category has two sub-categories: financial assets held fortrading, and those designated at fair value through profit orloss at inception.A financial asset is classified in this category ifacquired principally for the purpose of selling in the shortterm or if so designated by management, and they meet cer-tain criteria (IAS 39.9).Derivatives are also categorized as heldfor trading unless they are designated as hedges.Assets in thiscategory are classified as current assets if they are either heldfor trading or are expected to be realized within 12 monthsof the balance sheet date.

(b) Loans and receivablesLoans and receivables are non-derivative financial assets withfixed or determinable payments that are not quoted in anactive market.They are included in current assets, except formaturities greater than 12 months after the balance sheetdate.These are classified as non-current assets. Loans andreceivables are classified as ‘trade and other receivables’ in thebalance sheet.

(c) Available-for-sale financial assetsAvailable-for-sale financial assets are non-derivatives that areeither designated in this category or not classified in any of theother categories.They are included in non-current assetsunless management intends to dispose of the investmentwithin 12 months of the balance sheet date.

Purchases and sales of financial assets are recognized on thetrade-date, the date on which the Company commits to pur-chase or sell the asset. Investments are initially recognized atfair value plus transaction costs for all financial assets not car-ried at fair value through profit or loss. Financial assets carriedat fair value through profit or loss, are initially recognized atfair value, and transaction costs are expensed in the incomestatement. Financial assets are derecognized when the rightsto receive cash flows from the investments have expired orhave been transferred and the Company has transferred sub-stantially all risks and rewards of ownership. Available-for-salefinancial assets and financial assets at fair value through profitor loss are subsequently carried at fair value. Loans andreceivables are carried at amortised cost using the effectiveinterest method.Gains or losses arising from changes in thefair value of the “financial assets at fair value through profit orloss” category are presented in the income statement withinother (losses)/gains – net, in the period in which they arise.Dividend income from financial assets at fair value throughprofit or loss is recognized in the income statement as part ofother income when the Company’s right to receive paymentis established.

The Company assesses at each balance sheet datewhether there is objective evidence that a financial asset or agroup of financial assets is impaired.

2.15 Derivative financial instru-ments

Derivatives are initially recognized at fair value on the date aderivative contract is entered into and are subsequently re-measured at their fair value.The method of recognising theresulting gain or loss depends on whether the derivative isdesignated as a hedging instrument, and if so, the nature of theitem being hedged.The Company designates certain deriva-tives as either : (1) hedges of the fair value of recognized assetsor liabilities or a firm commitment (fair value hedge); (2)hedges of a particular risk associated with a recognized assetor liability or a highly probable forecast transaction (cash flowhedge); or (3) hedges of a net investment in a foreign opera-tion (net investment hedge).

As of 31 December 2009 and 2008, the Company did nothave any derivative transactions that qualified for hedgeaccounting under IAS 39. Changes in the fair value of thesederivative instruments are recognized immediately in theincome statement.

When the Group provides guarantees to parties outsidethe Group for any losses suffered in derivatives due to breachof contract, a provision is made for the fair value of the deriva-tive when the loss becomes probable.

2.16 Inventories

Bunkers inventories are valued at the lower of historical costand net realisable value applying the FIFO (first-in, first-out)principle.


27

2.17Trade receivables

Trade receivables are recognized initially at fair value and sub-sequently measured at amortised cost using the effectiveinterest method, less provision for impairment.A provision forimpairment of trade receivables is established when there isobjective evidence that the group will not be able to collect allamounts due according to the original terms of the receiv-ables. Significant financial difficulties of the debtor, probabilitythat the debtor will enter bankruptcy or financial reorganisa-tion, and default or delinquency in payments (more than 120days overdue) are considered indicators that the trade receiv-able is impaired.The amount of the provision is the differencebetween the asset’s carrying amount and the present value ofestimated future cash flows, discounted at the original effec-tive interest rate.The carrying amount of the asset is reducedthrough the use of an allowance account.

2.18 Cash and cash equivalentsCash and cash equivalents, includes cash in hand and depositsheld at call with banks.

2.19 Restricted cashRestricted cash deposits comprise of funds held in separateGroup bank accounts, which will be used to settle accruedtaxation liabilities related to employee’s tax deduction.Restricted cash are excluded from cash and cash equivalentsin the statement of cash flows.

2.20 Share capitalOrdinary shares are classified as equity. Costs directly attribut-able to the issue of new shares or options are shown in equityas a deduction, net of tax, from the proceeds.

2.21 BorrowingsBorrowings are recognized initially at fair value, net of transac-tion costs incurred. Borrowings are subsequently stated atamortised cost; any difference between the proceeds (net oftransaction costs) and the redemption amount is recognizedin the income statement over the period of the borrowingsusing the effective interest method.

Borrowings are classified as current liabilities unless theGroup has an unconditional right to defer settlement of theliability for at least 12 months after the balance sheet date.

2.22Trade payablesTrade payables are recognized initially at fair value and subse-quently measured at amortized cost using the effective inter-est method.

2.23Taxation

Tax expense/income includes current taxes and the change indeferred taxes. Deferred income tax is provided for all tem-porary differences between the book value and the tax basisof assets and liabilities and for tax losses carried forward.Deferred tax assets made probable through prospectiveearnings that can be utilized against the tax reducing tempo-rary differences are recognized as deferred income tax.Deferred tax asset and deferred tax liability are recognizedindependently of when the differences will be reversed and, asa rule, at nominal value. Deferred tax asset and tax liabilityare measured on the basis of estimated future tax rate.Parts of the Company’s activities within the Norwegian sub-sidiaries are structured within the regulations for the Norwe-gianTonnageTax System for shipping companies.

The Company has estimated a tax rate of 0% for theCompanies subject to the regulations of the shipping com-pany regime. For all companies under this regime, the Com-pany has estimated 0% deferred tax on temporary differenceswhen entering the regime. For companies not included in theregime, and for taxable financial revenues in companies underthe regime, the Company applies a tax rate of 28% for Nor-wegian companies and 10% for Cyprus companies.Taxexpense/income includes current taxes and the change indeferred taxes.

Deferred income tax is provided in full, using the liabilitymethod, on temporary differences arising between the taxbases of assets and liabilities and their carrying amounts in theconsolidated financial statements. However, the deferredincome tax is not accounted for if it arises from initial recogni-tion of an asset or liability in a transaction other than a busi-ness combination that at the time of the transaction affectseither neither the accounting nor taxable profit or loss.Deferred income tax is determined using tax rates (and laws)that have been enacted or substantially enacted by the bal-ance sheet date and are expected to apply when the relateddeferred income tax asset is realized or the deferred incometax liability is settled.

Deferred income tax assets are recognized to the extentthat it is probable that future taxable profit will be availableagainst which the temporary differences can be utilized.

Deferred income tax is provided on temporary differ-ences arising on investments in subsidiaries and associates,except where the timing of the reversal of the temporary dif-ference is controlled by the Company and its probable thatthe temporary difference will not reverse in the foreseeablefuture.

2.24 Profit-sharing and bonus plansThe Group recognizes a liability and an expense for bonusesand profit-sharing to all employees, based on a formula thattakes into consideration the performance of comparisonswith peer group companies.The Group recognizes a provisionwhere contractual obligations exists or where there is a pastpractice that has created a constructive obligation.

28

2.25 Pension costs and obligation

The liability recognized in the balance sheet in respect of definedbenefit pension plans is the present value of the defined benefitobligation in the balance sheet date less the fair value of planassets, adjusted for unrecognized actuarial gains and losses. Thepresent value of the defined benefit obligations is determined bydiscounting the estimated future cash outflows using interest ratesfor high-quality corporate bonds which are denominated in thecurrency in which the benefits will be paid,and which have termsto maturity approximating to the terms of the related pension lia-bility.

Actuarial gains and losses arising from new information orchanges in actuarial assumptions in excess of the higher of 10% ofthe value of the pension assets or 10% of the pension obligationsare recognized in the income statement over the expected aver-age remaining working life of the employees.

The net pension cost for the year (gross pension cost minusestimated return on pension funds) is included in the profit andloss account as salary-related expenses. The estimated net obliga-tions are included in provisions in the balance sheet.

2.26 ProvisionsProvisions represent liabilities of uncertain timing or amount.

Provisions are recognized when the group has a presentlegal or constructive obligation, as a result of past event, forwhich it is probable that an outflow of economic benefits willbe required to settle the obligation, and a reliable estimate canbe made for the amount of the obligation.

Provisions are measured at the present value of theexpenditures expected to be required to settle the obligationusing a pre-tax rate that reflects current market assessmentsof the time value of money and the risks specific to the obliga-tion. The increase in the provision due to passage of time isrecognized as interest expense.

2.27 Revenue recognitionThe group’s activity is chartering out different kind of AnchorHandlingTug Supply vessels (AHTS’s) and Platform SupplyVessels (PSV`s).

Revenue comprises the fair value of the considerationreceived or receivable for the sale of goods and services inthe ordinary course of the Group’s activities. Revenue isshown net of value-added tax, withholding tax, returns,rebates and discounts and after eliminated sales within theGroup. Revenue is recognized as follows:

Charter rate contractsCharter contracts are classified as operating leases under IAS17. Revenue derived from charter contracts is recognized inthe period over the lease term on a straight line basis. Related

services are recognized as revenue in accordance with theservices being rendered.

Vessels without signed contract in place at discharge haveno revenue before a new contract is signed. Charter relatedexpenses incurred for vessels in the idle time are expensed.Revenues from time charters and bareboat chartersaccounted for as operating leases are recognized over therental periods of such charters, as service is performed on astraight line basis.

Interest incomeInterest income is recognized on a time-proportion basisusing the effective interest method.When a receivable isimpaired, the Group reduces the carrying amount to itsrecoverable amount, being the estimated future cash flow dis-counted at original effective interest rate of the instrument,and continues unwinding the discount as interest income.Interest income on impaired loans is recognized using theoriginal effective interest rate.

Dividend incomeDividend income is recognized when the right to receive pay-ment is established.

2.28 Dividend distributionDividend distribution to the Company’s shareholders is rec-ognized as a liability in the Group’s financial statements in theperiod in which the dividends are approved by the Company’sshareholders until payment is made.

2.29 Earnings per share

Earnings per share are calculated by dividing the net profit/lossfor the Company by the average weighted number of out-standing shares over the period in question. Diluted earningsper share include the effect of the assumed conversion ofpotentially dilutive instruments such as stock options.

2.30 Statement of cash flowThe statement of cash flow is presented in accordance withthe indirect method.

2.31 ComparativesWhere necessary, comparative figures have been adjusted toconform with changes in presentation in the current year.


29

30

3. Financial risk management

3.1 Financial risk factors

The Group’s normal business activities expose it to a varietyof financial risks. Financial market risk is the possibility that fluc-tuations in currency exchange rates, interest rates and freightrates in particular will affect the value of the Group’s assets,liabilities or future cash flow.The Group has formulated afinance strategy where certain basic targets and policies aremade for value adjusted equity (note 3.2), required liquidity,exchange rates, interest rates, funds management etc.

To reduce and manage these risks,management dailyreviews and assesses its primary financial and market risks.Once risks are identified, appropriate action is taken to miti-gate the specific risk. Financial derivatives are used for hedgingpurposes in order to mitigate financial risks and only wellunderstood conventional derivatives are used. Financial deriv-atives are entered into with our main banks which are highlyrated financial institutions.The Group use derivatives in orderto manage risks associated with interest rate and currency.

Foreign exchange risk:The Company’s functional currency is USD.The Group

operates internationally and is exposed to foreign exchangerisks arising from various currency exposures primarily withrespect to Euro (EUR), UK Pounds (GBP) and Norwegiankroner (NOK). Foreign exchange risks arise from future com-mercial transactions and recognized assets and liabilities.TheGroup had in 2009 and 2008 mainly USD, EUR,GBP andNOK revenues and mainly USD and NOK expenses. Imbal-ances between revenues and costs are often managed usingforward currency contracts.The table below shows theimpact on profit before tax as a consequence of anincrease/decrease in the NOK/USD,GBP/USD and EUR/USDexchange rates;

Credit risk:Concentration risk:The Group trades only with recognized, creditworthy thirdparties. Receivable balances are monitored on an ongoingbasis with the result that the Group’s exposure to bad debt isnot significant. Below,we present a table showing the concen-tration risks for 2009 and 2008;

Cash flow and fair value interest rate riskThe Group’s exposure to the risk of market interest rates aremainly related to the Group’s long term debt obligations withfloating interest rates. Borrowings issued at variable ratesexpose the group to cash flow interest rate risk which is par-tially offset by cash held at variable rates. Borrowings issued atfixed rates expose the group to fair value interest rate risk.Depending on the development of and on internal analyses ofthe interest rate market, the Group enters into various inter-est rate contracts to alter the ratio of fixed rate to floatingrate debt.

The sale and leaseback transactions are based on 5 yearfixed interest rates from closing of the respective transactionsand are as such not exposed to changes in LIBOR during theinitial 5 year period.

Group policy is to maintain approximately 50% of its bor-rowings in fixed rate instruments.As of 31 December 2009,after taking into account the effect of the interest rate swaps,approximately 49% and 51% respectively of the interest bear-ing debt was fixed.

Interest rate risk table:The following table demonstrates the sensitivity to a reason-ably possible change in interest rates, with all other variablesheld constant, of the Group’s profit before tax.

Foreign Exchange Risk

NOK Increase Effect2009 +/-10% +/- 688

2008 +/-10% +/- 4 992

GBP Increase Effect

2009 +/-10% +/- 2 550

2008 +/-10% +/- 748

EUR Increase Effect

2009 +/-10% +/- 3 864

2008 +/-10% +/- 1 706

Receivables at 31.12.2009

USD '000 % of total1 to 5 largest 19 298 85,8%

6 to 10 largest 2 542 11,3%

11 to 15 largest 530 2,4%

Others 113 0,5%

Total 22 483 100,0%

Receivables at 31.12.2008

USD '000 % of total1 to 5 largest 32 187 67,2%

6 to 10 largest 8 479 17,7%

11 to 15 largest 4 782 10,0%

Others 2 418 5,1%

Total 47 866 100,0%

Cash flow interest rate risk

Increase/decrease inbasis points

Effect on profitbefore tax(USD '000)

2009 +/-10 +/-267

2008 +/-10 +/-291

31


Liquidity RiskThe Group monitors its risk to a shortage of funds by closely monitoring the projected cash flow from operations, financialexpenses, its capital expenditure program related, in particular to commitments (Note 6) under its newbuilding program.TheGroup maintains sufficient cash for its daily operations via short term cash deposits at banks.The table below analyses the group’s non-derivative financial liabilities and net-settled derivative financial liabilities into rele-

vant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date.Derivativefinancial liabilities are included in the analysis if their contractual maturities are essential for an understanding of the timing of thecash flows.The amounts disclosed in the table are the contractual undiscounted cash flows.The table below summarizes thematurity profile of the Group’s financial liabilities; (all numbers in USD 1,000)

3.2 Capital risk management

The Company’s objective is to actively pursue an optimalfinancing of its fleet at any time for the purposes of providinggood return to shareholders and benefits for other stakehold-ers, to aim at low cost of capital and at the same time securethe Company’s ability to continue as a going concern.The Company will actively use the capital markets when

doing investments, and does not intend to hold significant liquidreserves for investments.The Company will aim at distributingretained earnings above a satisfactory working capital level asdividend.In the shipping and offshore industry, emphasis is made on

ValueAdjusted Equity.A certain minimumValueAdjusted Equityis often used as one financial covenant by financial institutions.The main source of financing of the Company is Senior

Bank Loans from international banks which are long term play-ers in the shipping and offshore business segments.The Com-pany believes in building and maintaining long term relationshipswith these financial institutions and has pursued this strategysince the Company was founded.Bank loan financing has been combined with two specially

structured sale and leaseback transactions for (currently) 6 ves-sels.The sale and leaseback transactions are designed to with-stand possible drops in the market by having fewer and leanerfinancial covenants compared to the senior bank loan facility.We consider the combination of senior bank loans and sale

Less than 3 months 3 to 12 months 1 to 5 yearsMore than 5

years Total

At 31 December 2009Interest bearing loans and borrowings 3 206 16 964 291 691 0 311 861

Finance lease liability 9 034 27 102 140 505 142 002 318 644

Trade and other payables 3 588 0 0 0 3 588

15 829 44 067 432 196 142 002 634 093

At 31 December 2008Interest bearing loans and borrowings 12 290 36 084 278 821 55 643 382 838

Finance lease liability 8 051 24 154 135 934 182 709 350 849

Trade and other payables 10 636 14 527 0 0 25 163

30 977 74 765 414 755 238 352 758 850

Future capital expenditure newbuilding contracts as at 31 December 2009

Contractual yard payments 0 72 000 68 130 0 140 130

Future capital expenditure newbuilding contracts as at 31 December 2008

Contractual yard payments 12 078 35 871 67 551 0 115 500

and the leaseback transaction as an effective and flexible wayto finance the Company’s fleet at an acceptable cost.

TheValue Adjusted Equity by year end 2009 and 2008 can beseen in the below table; (all numbers in USD million)

(*) Market values obtained from two independent brokers ona charterfree basis including excess value of newbuildingcontracts

(**) Excluding deferred gain.

Year end 2009 Year end 2008

Total value adjustedassets (*)

869 991

Total debt (**) 518 586Value Adjusted Risk Capital 351 or 40% of

total valueadjusted assets

404 or 41% oftotal value

adjusted assets

4. Critical accounting estimates and judgements

Estimates and judgments are continually evaluated and arebased on historical experience and other factors, includingexpectations of future events that are believed to be reason-able under the circumstances.

4.1 Critical accounting estimatesand assumptions

The Group makes estimates and assumptions concerning thefuture.The resulting accounting estimates will, by definition,seldom equal the related actual results.The estimates andassumptions that have a significant risk of causing a materialadjustment to the carrying amounts of assets and liabilitieswithin the next financial year are discussed below.

(a) Impairment of vesselsThe preparation of financial statements in conformity withIFRS requires management to make estimates and assump-tions that affect the reported amounts of assets and liabilities.Actual results could differ from such estimates. The balancesheet value of the Company’s vessels, new build contractsexcluded, comprises approximately 82 % (2008: 79 %) of thetotal balance sheet. In the current market for supply vessels,the recoverable amount of the Group’s vessels at 31 Decem-ber 2009 was higher than the balance sheet value, except for4 of its AHTS vessels under the sale and financing leaseback.

The Group regurarly performs a test of the estimatedrecoverable amount of the vessels by obtaining third partyprofessional valuations for all vessels from two different val-uers, calculating the value in use for all vessels, and comparedthe higher of the two to the carrying value of the vessels.Thefair value less costs to sell was taken by management to bethe average of the two independent valuations obtained.Therecoverable amount for all vessels was based on the fair valueless costs to sell except for two vessels for which the recover-able amount was based on value in use calculations. Four ofthe AHTS that are under sale and finance leaseback wereidentified to be impaired.Their recoverable amount wasbased on their fair value less costs to sell.The impairmentamount did not exceed the unamortized deferred gain; henceno impairment was recognized in the income statement.Noimpairment was identified for any other of the Group's ves-sels as their recoverable amount was in all cases higher thanthe carrying amount.

The carrying amount of the 4 vessels for which impair-ment was identified comprises approximately 23% (2008:27%) of the total balance sheet.The carrying amount of the 2vessels for which the recoverable amount was based on the

32

value in use calculations comprises approximately 7% (2008:7%) of the total balance sheet.

A 10% change in the main assumptions used in the impair-ment test for the two vessels, whose recoverable amount wasbased on their value in use, would have the following impacton the carrying amount and deferred gain:

Decrease on carryingamount and deferred gain

10% increase of discount factor 1.195.79710% decrease of Income per day* 4.508.53310% decrease of utilization rate* 4.102.235

* 10% decrease in income and utilization rate would result inthe value in use being lower than the fair value less costs tosell.Therefore the decrease in carrying amount and deferredgain is based on the difference between the carrying amountand the fair value less costs to sell of the vessels.

(b) Tax legislationTax legislation is subject to varying interpretations. Refer toNote 29.

4.2 Critical judgments in applyingthe group’s accounting policies

(a) Classification of sale and leaseback transac-tionThe Group’s management has recognized the sale and lease-back transaction for six of its vessels in accordance with IAS17 “Leases” and SIC Interpretation 27 “Evaluating the Sub-stance ofTransactions Involving the Legal Form of a Lease”.Management has considered that the provisions of SIC 27 arenot applicable however the Group has substantial risks andrewards incidental to ownership and the exercise of theoption to purchase the vessels is considered to be almost cer-tain. Following this analysis the Group’s management has con-cluded that the leaseback is a finance lease since it considersthat the Group retains substantially all the risks and rewardsincidental to ownership since it is reasonably certain that theGroup will exercise the option to purchase the vessels.

As a result of the above the Group has derecognized thevessels and has recognized them back at their fair value whichwas higher than the carrying amount.The gain has beendeferred and is being amortised to the income statementover the lease term which is considered to be 12 years (referto the accounting policy on Lease agreements).

5. Segment reporting


3333

The chief operating decision maker for the Group is the top management together with the board of directors in matters thatconcern the day to day running of the business and in matters concerning acquisition and disposals of vessels.

Day to day running of the business includes decision on where the vessels should be located and duration of the contractswith the customers.

Primary Segment - Area of OperationsThe segment results for the year ended 31 December 2009 is as follows:

North Sea AfricaAustralia/Far East

North/SouthAmerica Mediterranean

UnallocatedTotal

Segment revenues 20 822 15 893 45 295 8 535 77 089 0 167 633Vessel operating expenses -17 166 -5 574 -10 815 -3 180 -29 426 0 -66 163Other gains/(losses) 0 0 0 0 0 8 953 8 953Gain on sale 0 659 0 1 689 6 863 -447 8 765Other operating expenses -956 -730 -2 079 -392 -3 539 0 -7 696EBITDA per segment 2 700 10 248 32 401 6 653 50 988 8 507 111 493EBITDAmargin per segment 13 % 64 % 72 % 78 % 66 % 67 %Depreciation -7 140 -1 967 -5 764 -3 077 -18 361 -60 -36 369EBIT per segment -4 440 8 281 26 636 3 576 32 627 8 446 75 126EBIT margin per segment -21 % 52 % 59 % 42 % 42 % 45 %Net Financial Items --3311 991155Pre-tax result 43 209Taxes 8 084Net Result 51 294

The segment split on assets and liabilities at 31 December 2009 is as follows:


North/SouthAmerica Mediterranean

UnallocatedTotal

Assets 140 817 46 836 184 306 52 517 254 364 115 223 794 063Liabilities 96 151 41 412 92 759 45 227 260 985 93 533 630 067

Segment assets and liabilities consist of vessels, deferred maintenance costs and inventories. All the other assets are not allocated items. Segment liabilities comprise of bank borrowings, sale and leaseback debt and deferred gain. All other liabilities are non allocated items.

The corresponding segment results for the year ended 31 December 2008 is as follows:

North sea AfricaAustralia/Far East

North/South

America Mediterranean

Un-allocated

items TotalSegment revenues 33 832 35 349 34 274 25 512 61 438 0 190 405Vessel operating expenses -11 183 -9 643 -8 272 -9 179 -21 922 0 -60 199Other gains/(losses) 0 0 0 0 0 -16 759 -16 759Gain on sale 0 1 387 0 21 614 6 411 27 29 440Other operating expenses -1 416 -1 480 -1 435 -1 068 -2 572 0 -7 971EBITDA per segment 21 233 25 613 24 567 36 879 43 355 -16 732 134 916EBITDA margin per segment 63 % 72 % 72 % 145 % 71 % 71 %Depreciation -4 455 -3 096 -4 240 -3 738 -14 703 -46 -30 277EBIT per segment 16 778 22 517 20 327 33 141 28 652 -16 778 104 641EBIT margin per segment 50 % 64 % 59 % 130 % 47 % 55 %Net Financial Items --5544 334466Pre-tax result 50 294Taxes 3 110Net Result 53 404

34



North/South

America MediterraneanUnallocated

Total

Assets 97 864 48 783 112 468 0 396 358 175 042 830 515

Liabilities 68 626 51 359 89 467 0 420 495 88 347 718 294

Secondary Segment - Type of VesselThe segment results for the year ended 31 December 2009 is as follows:

AHTS PSVUn-allocated

items TotalSegment revenues 105 971 61 662 0 167 633Vessel operating expenses -48 502 -17 659 0 -66 161Other gains/(losses) 0 0 8 953 8 953Gain on sale 7 828 937 0 8 765Other operating expenses -4 865 -2 831 0 -7 696EBITDA per segment 60 432 42 110 8 953 111 495EBITDA margin per segment 57 % 68 % 67 %Depreciation -28 704 -7 603 -61 -36 368EBIT per segment 31 728 34 507 8 892 75 127EBIT margin per segment 30 % 56 % 45 %Net Financial Items --3311 991155Pre-tax result 43 210Taxes 8 084Net Result 51 294



items TotalAssets 487 782 191 299 114 982 794 063Liabilities 344 896 193 670 91 501 630 067

The corresponding segment results for the year ended 31 December 2008 is as follows:


items TotalSegment revenues 146 061 44 344 0 190 405Vessel operating expenses -46 907 -13 292 0 -60 199Other gains/(losses) 0 0 -16 759 -16 759Gain on sale 13 695 15 717 27 29 439Other operating expenses -6 114 -1 856 0 -7 970EBITDA per segment 106 735 44 913 -16 732 134 916EBITDA margin per segment 73 % 101 % 71 %Depreciation -24 657 -5 574 -47 -30 277EBIT per segment 82 078 39 339 -16 779 104 639EBIT margin per segment 56 % 89 % 55 %Net Financial Items -54 346Pre-tax result 50 293Taxes 3 110Net Result 53 404



items TotalAssets 535 245 199 829 95 441 830 515Liabilities 460 489 179 242 78 563 718 294

All assets/liabilites and revevues are outside Cyprus.

FUTURE CAPITAL EXPENDITURE NEWBUILDING CONTRACTS

(Unaudited figures in USD 1,000)less than

tvelve monthsmore than

tvelve months TotalContractual yard payments 72 000 68 130 140 130Maximum committed bank borrowings* 12 200 0 12 200

35


6. Property, plant and equipment

VesselsFinance lease

vesselsVessels inprogress

Vehicles &equipment Total

Opening net book value as at 1 January 2008 280 498 233 328 83 871 89 597 785Additions 17 733 0 77 753 54 95 540Vessels leased -28 451 89 500 0 0 61 049Disposals 0 -21 847 -15 731 0 -37 578Delivered new buildings 114 158 0 -114 158 0 0Depreciation and amortisation -14 534 -15 696 0 -47 -30 277

Closing net book value as at 31 December 2008 369 404 285 285 31 735 95 686 520At 31 December 2008Cost or valuation 421 968 305 328 31 735 193 759 224Accumulated depreciation -52 564 -20 043 0 -98 -72 705Closing net book amount 369 404 285 285 31 735 95 686 520

Opening net book value as at 1 January 2009 369 404 285 285 31 735 95 686 520Additions 55 264 -345 8 910 44 63 873Currency effect translations 0 0 0 0 0Disposals 0 0 0 -14 -14Vessel impairment 0 -33 426 0 0 -33 426Cancellation of new buildings 0 0 -3 655 0 -3 655Delivered new buildings 10 664 0 -10 664 0 0Depreciation and amortisation -20 991 -15 317 0 -60 -36 368

Closing net book value as at 31 December 2009 414 340 236 197 26 327 65 676 930At 31 December 2009Cost or valuation 487 896 271 557 26 327 223 786 003Accumulated depreciation -73 555 -35 360 0 -158 -109 073Closing net book amount 414 340 236 197 26 327 65 676 930

Construction contracts (newbuildings) for investments in AHTS vessels and PSV’s are entered in the balance sheet as work inprogress, as the installments are payable to the shipyards. Directly attributable costs such as on-site supervision and other pre-delivery construction costs are also entered in the balance sheet as part of the purchase costs.

Contractual yard payments and debt – construction contractsThe new buildings which will be delivered during 2010 have the following payment- and funding profile:

* Based on current market values of the vessels, the total available bank commitment is USD 9.66 mill.

36

7. Pensions

The amount recognised in the balance sheet is determined as follows:

2009 2008Present value of funded obligation -624 -369Fair value of plan assets 528 280Estimated pension obligations at 31.12 -96 -89

Present value of unfunded obligation 0 0Unrecognised actuarial losses 16 59Unrecognised past service costs 0 0Liability in the balance sheet -80 -30

The movement in the defined benefit obligation over the year is as follows: 2009 2008

Beginning of year 369 236Service costs 258 190Interest costs 18 10Actuarial (gain)/loss -83 63Payroll tax of employer contribution, assets -27 -31Exchange differences 90 -99End of year 624 369

The movement in the fair value of plan assets of the year is as follows:

2009 2008Beginning of year 280 142Expected return on plan assets 17 14Employer contribution 192 216Actuarial losses/(gains) -33 -19Exchange differences 72 -73End of year 528 280

The amounts recognised in the income statement are as follows:2009 2008

Net over funded penson liability 0 0Interest cost 18 10Expected return on plan assets -17 -14Net actuarial losses recognised during the year 0 0Past service costs 258 190Losses on curtaliment 1 0Total included in staff costs 259 186

The principal actuarial assumptions used were as follows:

Discount rate 4,50 % 4,30 %Expected return on plan assets 5,70 % 6,30 %Future salary increase 4,50 % 4,50 %Future pension increases 1,40 % 2,00 %

37


Asset Liability Asset LiabilityCurrency exchange rate swap 0 2 836

Interest rate swaps 1 770 2 418Total 0 1 770 0 5 254

Financial assets at fair value through profit and lossListed securities - held-for-trading 0 6 335

2009 2008

8. Derivative financial Instruments

The financial derivatives are traded in an active market, and their fair value is based on general market assumptions. The deriva-tives are used for economic hedging purposes.

The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. Amarket is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group,pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’slength basis. The quoted market price used for financial assets held by the group is the current bid price. These instruments areincluded in level 1.

The full fair value of a hedging derivative is classified as a non-current asset or liability if the remaining maturity of the hedgeditem is more than 12 months and, as a current asset or liability, if the maturity of the hedged item is less than 12 months.

The fair value of all equity securities is based on their current bid prices in an active market.

9. Trade and other receivables

As at 31 December2009

As at 31 December2008

Trade receivables 22 483 47 866Less:Provision for impairment of receivables 0 0Trade receivables -Net 22 483 47 866Less non-current portion: loans to related parties 0 0Current Portion 22 483 47 866

Trade receivables that are less than four months due are not considered impaired. As of 31 December 2009, trade receivablesof USD 3.3 mill (2008: USD 7.2 mill) were past due but not impaired. These relate to a number of independent customers forwhom there has been no case of default in 2009 and one case of default in 2008 amounting USD0.5 mill which the Group haswritten off as other losses. None of the receivables due for more than four months are considered impaired. The aging analysisof these trade receivables is as follows:

AgingAs at 31 December

2009As at 31 December

2008Up to one month 19 198 40 690One to four months 3 163 6 525More than four months 121 651Total 22 483 47 866

The carrying amount of the group’s trade and other receivables are denominated in the following currencies

CurrencyAs at 31 December

2009As at 31 December

2008United State Dollars (USD) 14 051 23 328Euro (EUR) 7 144 17 056Great British Pounds (GBP) 1 062 7 482Norwegian Kroner (NOK) 226 0Total 22 483 47 866

The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above.The Group does not hold any collateral as security

10. Inventories

11. Cash and cash equivalents

38

The cost of inventories recognized as expenses and in included in operating expenses vessels, amounted toUSD 1,852 (2008: USD 4,124)

2009 2008Bunkers 2 221 878

Total 2 221 878

2009 2008Cash at bank and in hand 31 616 33 799Short-term bank deposits 0Total bank deposits 31 616 33 799

Specification of restricted depositsBank deposits 115 81

The carrying amounts of cash approximate fair value. Currently, there is no credit facility for the Group. Restricted bank depo-sits are for employee tax withholdings. According to the loan agreement and corresponding covenants regulations, the Companyhave to maintain, at all times, a minimum cash amount which equals 5% of the total debt (on the vessel accounts), or at leastNOK 85 mill. (USD 14,8 mill.)

39


40

12. Share capital

Number ofShares

(thousands) Share Capital Share premiumOther paid-

in-equity Total

Opening balance as at 1 January 2008 131 965 2 639 66 948 231 69 818Payment of dividend from share premium 0 -50 746 -50 746Valuation of share option scheme 1 011 1 011Cancellation of own shares (non traded) -2 000 -40 -40At 31 December 2008 129 965 2 599 16 202 1 242 20 044

Opening balance as at 1 January 2009 129 965 2 599 16 202 1 242 20 044 Valuation of share option scheme 478 478 At 31 December 2009 129 965 2 599 16 202 1 720 20 522

The total authorised number of ordinary shares as per 31 December 2009 is 129.964.867 shares with a par value of USD 0.02per share, of which 3.101.000 shares are being held by the company. All issued shares are fully paid.

Share option scheme

Employees:The Board of Deep Sea Supply PLC has approved a shareoption scheme for all employees. By year-end 2009, 994,989share options were granted to management and employeesof the Company.

During 2009 the Company decided to change both thenumber of share options and exercise price. The number ofshare options was reduced by 33% and the exercise pricechanged to equal the closing price on 13 March, 2009increased by 10% or NOK 6.99 per share. These shareoptions may be exercised with one third after one, two andthree years, respectively and all share options must be exer-cised within 5 years. The strike price shall be reduced, on aUSD for USD basis, by the amount of all dividends declaredby the Company in the period from the date of grant until thedate the subsisting share options is exercised. Subsequentshare options have been granted to new employees based onthe same principle.

By year end 2009 the following share options weregranted to the employees and management of the company:

Exercise priceNo of shares options (as per 31.12.2009)994,989 NOK 6.99

Board:During 2009 the share options granted to the board wasreduced by 1/3 and the exercise price was set to the closingprice on 13 March, 2009 increased by 10% or NOK 6.99 pershare. The share options granted were then reduced from900,000 to 600,000 (200,000 for the Chairman of the boardand 133,333 for each director). The number of directorsincluding the chairman increased in 2009 from 4 to 5.

By year end 2009, a total of NOK 733,332 share optionswere granted at the following (December 2009) exerciseprices


Change of controlThe share options for the board and the share options andcertain other benefits for the employees will come into effectat change of control in the Company.

13. Trade and other payables

2009 2008Trade payables 788 7 274Social Security and other taxes 593 571Accrued expenses 2 206 2 666Other payables 0 14 527Total 3 588 25 039

Fair value of trade and other payables equal their carrying amounts.

41


Group 2009 2008Non-currentBank borrowings 260 698 266 998Finance lease liabilities 210 901 225 199CIRR loan 49 374 44 799

520 973 536 996CurrentBank borrowings 25 207 23 724Finance lease liabilities 14 298 15 495CIRR loan 5 038 4 144

44 542 43 362Total Borrowings 565 515 580 359

The carrying amounts of the group's borrowings are denominated in the following currencies:

2009 2008US Dollars 456 677 483 410Norwegian Kroner 108 838 96 949

565 515 580 359

The fair value of both current and non-current borrowings are not materially different from their carrying amount.

The effective interest rates at the balance sheet day were as follows:2009 2008

Bank borrowings (NOK) 3,44 % 11,26 %Bank borrowings (USD) 1,83 % 5,32 %

(a) Bank borrowings

Bank borrowings comprise solely of the senior loan facillity. Bank borrowings maturity is in 2014.The senior loan facility is secured with a first priority mortgage in the financed vessels.

(b) Finance lease liabilities

2009 2008Finance lease liabilities - minimum lease payments:Not later than 1 year 36 137 3322 220066Later than 1 year and not later than 5 years 140 505 113355 993344Later than 5 years 142 002 118822 770099

318 644 350 849

Future finance charges of finance leases -93 445 -110 155Present value of finance lease liabilities 225 199 240 694

The present value of finance lease liabilities is as follows:Not later than 1 year 14 298 1155 449955Later than 1 year and not later than 5 years 76 674 7777 117711Later than 5 years 134 227 114488 002288

225 199 240 694

14. Borrowings

(c) CIRR LoanDuring the year ended 31 December 2008 the Group has applied for two Commercial Interest Reference Rate (CIRR) loanfrom the Norwegian Export Credit Agency. The amount of the loans was NOK 132 mill (USD 19 mill) and NOK 216 mill (USD31 mill). The duration of the loans is 12 years and the cash proceeds from the loans have been deposited in fixed depositaccount with a Norwegian bank at a higher interest rate than that of the loans. The agreed period of the deposits is identicalwith the one of the loans. The loans and the interest thereof will be repaid from that account and the difference has been recog-nised as deferred gain and will be amortised over the period of the life of the asset. The reason for the increase in the value ofCIRR Loan in 2009 from 2008 is the fact that the loan is denominated in NOK and the closing rate of USD/NOK caused theloan to increase despite the repayments. The difference between the deposit and the loan amount is the borrowing costs incur-red which are deduted from the loan and amortized over the life of the loan.

42

15. Income tax expense

In 2007 the Company has recognized an amount (USD 8.1million) as taxes payable following the transition rules fromthe old tax regime to the new tonnage tax system adopted bythe Government.After a High Court decision in Norway,made at 12th of

February 2010, it was concluded that the transition ruleswere in breach of the constitution, paragraph 97.Following this decision,The Company has decided to

reverse the provision made in 2007 and to recognize the taxalready paid in 2008 and 2009 as a receivable in the balancesheet.The Norwegian government announced 26 March 2010

that they will propose a change in tax laws that will give anoption to settle the untaxed profits from the previous ton-nage tax system with a one-time assessment and paid overthe period 2011-2013. If the proposal is put forward andadopted as announced, this will mean that the company willbe able to settle its tax liability with a total payment of NOK15.8 million (USD 2.8 million).

2009 2008Current tax 8 084 3 110

The impact on the results of 2009 is:The equity has improved by USD 8.1 million (NOK 46.6 mil-lion), liabilities has been reduced by USD 6.5 million (NOK37.6 million) and assets have increased by USD 1.6 million(NOK 9.1 million), which corresponds to taxes already paid.The profit and loss has been impacted positively by USD

8.1 million, or USD 0.06 per share.This has been recognized inQuarter 4, 2009.The Group's uncertain tax positions are reassessed by

management at every balance sheet date. Liabilities are recor-ded for income tax positions that are determined by manage-ment as more likely than not to result in additional taxes beinglevied if the positions were to be challenged by the tax autho-rities.The assessment is based on the interpretations of taxlaws that have been enacted or substantively enacted by thebalance sheet date and any known court or other rulings onsuch issues. Liabilities for penalties, interest and taxes otherthan on income are recognized based on management's bestestimate of the expenditure required to settle the obligationsat the balance sheet date.

16. Provisions for other liabilities and charges

Bonus agreementAll employees of Deep Sea Supply Management AS andDeep Sea Supply Management (Cyprus) Ltd. have perfor-mance bonus agreements with the Group based on compari-son with peer group companies.The bonus is calculatedannually with a maximum payment equal to the annual salaryfor the CEO, 50% of the annual salary for the CFO and COOand 25% of the salary for other employees.The weighted average fair value of the bonus payment

granted during the period determined using the multi

dimensional Geometrical Brownian Motion Monte Carlovaluation model was USD 257,000 (NOK 1,485,000) equiva-lent to 33% bonus payment.The significant inputs into themodel were average volatility of the peer group of 44.35%, nodividend yield and an expected correlation matrix for thepeer group between 0.52 and 1.00.The volatility of the peergroup is measured at the standard deviation of continuouslycompounded share returns based on statistical analyses ofdaily share prices over the last two years.

2009 2008

Change in value of financials derivatives 3 752 -8 962Gain on disposal of financial assets at fair value through profit and loss 8 456 -8 192Impairment of other receivables 0 -11 032Gain on lower negotiated purchase vessel price 1 087 0Amounts received on previously impaired receivables 14 0Impairment of trade receivables 0 -546Cancelation of new building contracts -603 0Gain on sale of vessels * -447 20 225Deferred gain amortized in the period 9 212 9 215Total 21 470 708

* For 2009, the amount pertains to additional expenses for a sale made in 2008

17.Other (losses)/gains - net

43


18. Employee benefit expense

19. Expenses by nature

2009 2008

Wages and salaries 3 546 2 316Social security costs 645 319Pension costs – defined benefit plans (Note 7) 259 186Other benefits 81 88Total 4 531 2 908

Number of employees as per year-end 17 14

2009 2008Depreciation, amortisation and impairment charges (Note 6) 36 368 30 277Operating expenses vessels (Note 20) 66 163 60 199Payroll expenses administrative employees (Note 18) 4 531 4 008Other administration costs 3 165 3 963Total 110 227 98 447

20. Operating expenses vessels

2009 2008Crew expenses 39 036 34 264Insurance 4 474 3 715Repairs and maintenance 6 276 6 302Provisions, stores, lubrication oil, administration of operations and miscellaneous 16 377 15 918Total 66 163 60 199

2009 2008Financial expenses -28 012 -41 545Financial income 665 2 122Realised exchange gain/(losses) -1 116 536Unrealised currency exchange gains/(losses) -7 203 -3 487

-35 667 -42 374

21. Finance costs

The above excludes crew payroll expenses which are included in operating expenses vessels (Note 20)

44

22. Earnings per share

2009 2008Profit attributable to equity holders of the company 51 294 53 404Weighted average number of ordinary shares (thousands) 126 864 126 864Basic earnings per share (USD per share) 0,404 0,421

DilutedDiluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assumeconversion of all dilutive potential ordinary shares. The Company’s only category of dilutive potential to ordinary shares is theshare options. Share options have been granted to Board of Directors and management, and per year-end 2009 there weretotally 1 728 327 share options outstanding. The share options are included in the diluted number of shares depending on whet-her or not they were in the money per year-end 2009.

BasicBasic earnings per share are calculated by dividing the profit attributable to equity holders of the Company by the weighted ave-rage number of ordinary shares in issue during the year. During 2007, The Company has acquired 3 101 000 own shares, andthese are not included in the weighted average number of shares. Also, in September 2007 all outstanding warrants were exerci-sed, and hence the total number of shares increased by 1 791 667. Total number of outstanding shares as per year-end 2009 was129 964 861, including the 3 101 000 own shares.

2009 2008Profit attributable to equity holders of the company 51 294 53 404

Weighted average number of ordinary shares diluted(thousands) 128 592 126 864Diluted earnings per share (USD per share) 0,399 0,421

45


23. Cash generated from operations

2009 2008Profit for the period 51 294 53 404Adjustments for :-Tax 0-Depreciation 36 368 30 276-Loss/(gain) from sale of assets 447 -20 225-Interest expense 28 012 41 545-Effect from financial derivatives -3 752 9 016-Effect from financial assets at fair value through profit and loss -8 456 8 192-Effect from receivables impairment 589 11 578-Exchange (gains)/losses 3 506 -14 087Changes in working capital(excluding the effects of acquisition and exchange differences on consolidation)-Inventories -1 343 889-Trade and other receivables 25 383 -6 235-Trade and other payables -21 451 12 111-Other accruals 0 0Cash generated from operations 110 598 126 463

24. Credit quality

The credit quality of financial assets that are neither past duenor impaired can be assessed by reference to external creditratings (if available) or to historical information about counter-party default rates.

All trade receivables at year end are considered as notimpaired based on historical information since they have hadno previous cases of default.

The ratings for the banks where the Group holds it cash atbank and short-term bank deposits are as follows:

As at 31 December 2009Credit Rating AmountA1 30 338Aa2 1 168A2 90Baa3 20Total 31 616

As at 31 December 2008Credit Rating AmountA/A-1 24 267AA- 8 090A-1+ 1 442Total 33 799

46

25. Related-party transactions

Key management compensationKey management includes the Chief Executive Officer (CEO),the Chief Financial Officer (CFO) and the Chief CharteringOfficer (CCO) of the company and the board of directors.

The total compensation to the key management of theGroup amounted to USD 1,213 thousand (NOK 6.98 million)as of 31 December 2009. The corresponding amount as of 31December 2008 was USD 1,096 (NOK 7.67 million). The keymanagement has no other form of compensation, exceptsalary, share options scheme mentioned in note 12 and the

bonus agreement mentioned in note 16. There are noloans to the employees of the Group as per 31 Decem-ber 2009 and per 31 December 2008.

Remuneration to the boardSuggested remuneration to the Board in 2009 is USD165 (NOK 0.95 mill), whereof USD 61 (NOK 0.35 mill)is suggested to the Chairman. In 2008 payment to theBoard was USD 152 (NOK 0.95 mill), whereof USD 56(NOK 0.35 mill.) was payment to the Chairman.

26. Other short term receivables

Other short term receivables comprise mainly from prepay-ments made for the insurance of the vessels, VAT receivablefrom the government, insurance claims and prepaid expenses.

27. Auditors remuneration

Remuneration to the auditors expenses in the financial state-ment for 2009 equals USD 270 thousand (2008: USD 336thousand) for audit services and USD 54 thousand (2008:USD 307 thousand) for non-audit services.

47


28. Financial instruments by categoryry

Setting out below is a comparison by category for carrying amounts and fair values of all of the group’s financialinstruments that are carried in the financial statements.

GroupLoans and

Receivables

Assets at fair valuethrough profit and

lossAvailable for sale Total

31 December 2009Assets as per balance sheet

Financial assets at fair value through profit and loss - - Trade and other instruments 28 832 28 832 CIRR Deposits 54 464 54 464 Cash and cash equivalents 31 616 31 616 Total 114 912 - - 114 912

Liabiliities at fairvalue through the

profit and lossOther financial

liabilities TotalLiabilities as per balance sheetBorrowings 511 103 511 103 CIRR Loans 54 412 54 412 Derivative financial instruments 1 770 1 770 Total - 1 770 565 515 567 285

GroupLoans and

Receivables


lossAvailable for sale Total

31 December 2008Assets as per balance sheetFinancial assets at fair value through profit and loss 6 335 6 335 Trade and other instruments 54 038 54 038 CIRR Deposits 48 943 48 943 Cash and cash equivalents 33 799 33 799 Total 136 780 6 335 - 143 115

Liabiliities at fairvalue through the

profit and lossOther financial

liabilities TotalLiabilities as per balance sheetBorrowings 531 419 531 419 CIRR Loans 48 943 48 943 Derivative financial instruments 5 522 5 522 Total - 5 522 580 362 585 884

48 48

(a) Tax legislationThe Company is subject to taxes in several jurisdictions,where significant judgement is required in calculating the taxprovision for the Company. There are many transactions forwhich the ultimate tax determination is uncertain and forwhich the Company makes provisions based on an assess-ment of internal estimates, tax treaties and tax regulations inthe different countries where the Company is operating, andappropriate external advice. Where the final tax outcome ofthese matters is different from the amounts that were initiallyrecorded, such difference will impact the tax charge in theperiod in which the outcome is determined.

(b) The volatility in global financial marketsThe global liquidity crisis which commenced in the middle of2007 resulted in a lower level of capital market funding andhigher interbank lending rates. Although the situation hasimproved during 2009, debt is still more expensive thanbefore the crisis and there is less lending capacity amongst the

29. Contingencies

banks. Offshore Supply is a capital intensive business and awell functioning debt market is important in order to refi-nance existing debt on maturity and to finance new vessels.The debt market is also important for the Company’s cus-tomers as they use the debt market to finance new projectshence having an impact on the level of demand for offshoresupply vessels. Such conditions may have an impact onexpected future profitability and cash flows. Managementbelieves it is taking all the necessary measures to support thesustainability and growth of the Company’s business in thecurrent circumstances.

30. Sale and leaseback effect

The impact from the sale and leaseback transactions on the profit and loss and balance sheet is as follows:

Profit and loss impact for the year ending 31 December:

2009 2008Interest paid -17 887 -23 303Deferred gain recognized in profit and loss 9 212 9 215Depreciation charge of leased vessels -15 317 -15 696

Balance sheet value of assets and liabilities under sale and leaseback2009 2008

Cost of leased vessels 236 197 285 285Sale and leaseback debt - long term -210 901 -225 199Sale and leaseback debt - short term -14 298 -15 495Deferred gain - long term -51 486 -90 752Deferred gain - short term -5 830 -9 201

49


31. Deferred gain on finance leased vessels

32. Events after the balance sheet date

Two of the AHTS vessels, Sea Marten and Sea Otter havebeen awarded a 3-year contract in Brazil. Commencement ofthe contract will be in Quarter 2, 2010.

2009 2008Opening balance at the beginning of the year 99 954 56 087Additions due to new vessels leased 0 53 082Amortized during the year -9 211 -9 215Vessel impairment effect -33 426 0Closing balance at the year end 57 316 99 954

(5)Board Members: Phidias K Pilides (CEO), Dinos N Papadopoulos (Deputy CEO), Panikos N Tsiailis, Christakis Santis, Stephos D Stephanides, Costas L Hadjiconstantinou, George Foradaris,Costas M Nicolaides, Angelos M Loizou, Vasilis Hadjivassiliou, Androulla S Pittas, Savvas C Michail, Costas L Mavrocordatos, Christos M Themistocleous, Panicos Kaouris, Nicos A Neophytou,George M Loizou, Pantelis G Evangelou, Liakos M Theodorou, Stelios Constantinou, Tassos Procopiou, Andreas T Constantinides, Theo Parperis, Constantinos Constantinou, Petros C Petrakis,Philippos C Soseilos, Evgenios C Evgeniou, Christos Tsolakis, Nicos A Theodoulou, Nikos T Nikolaides, Cleo A Papadopoulou, Marios S Andreou, Nicos P Chimarides, Aram Tavitian,Constantinos Taliotis, Stavros A Kattamis, Yiangos A Kaponides, Tasos N Nolas, Chrysilios K Pelekanos, Eftychios Eftychiou, George C Lambrou, Chris Odysseos, Constantinos L Kapsalis, SteliosA Violaris, Antonis Hadjiloucas, Petros N MaroudiasDirectors of Operations: Androulla Aristidou, Achilleas Chrysanthou, George Skapoullaros, Demetris V Psaltis, George A Ioannou, George C Kazamias, Michael Kliriotis, Marios G Melanides,Sophie A Solomonidou, Yiannis Televantides, Antonis Christodoulides, Anna G Loizou

Offices: Nicosia, Limassol, Larnaca, Paphos PricewaterhouseCoopers Ltd is a private company,Registered in Cyprus (Reg. No. 143594)

PricewaterhouseCoopers Limited

City House6 Karaiskakis Street

Independent Auditor's ReportTo the Members of Deep Sea Supply Plc

CY-3032 Limassol

P O Box 53034

CY-3300 Limassol, Cyprus

Telephone: + 357 - 25555000

Facsimile: + 357 - 25555001

www.pwc.com/cy

Report on the Financial Statements

We have audited the consolidated financial statements of Deep Sea Supply Plc (the“Company”) and its subsidiaries (together, the “Group”), on pages 16 to 49, which comprisethe consolidated balance sheet as at 31 December 2009, and the consolidated statementsof income, comprehensive income, changes in equity and cash flows for the year thenended, and a summary of significant accounting policies and other explanatory notes.

Board of Directors’ Responsibility for the Financial Statements

The Company’s Board of Directors is responsible for the preparation of financialstatements that give a true and fair view in accordance with International FinancialReporting Standards as adopted by the European Union (EU) and the requirements of theCyprus Companies Law, Cap. 113. This responsibility includes: designing, implementingand maintaining internal control relevant to the preparation and fair presentation of financialstatements that are free from material misstatement, whether due to fraud or error;selecting and applying appropriate accounting policies; and making accounting estimatesthat are reasonable in the circumstances.

Auditor's Responsibility

Our responsibility is to express an opinion on these consolidated financial statementsbased on our audit. We conducted our audit in accordance with International Standards onAuditing. Those Standards require that we comply with ethical requirements and plan andperform the audit to obtain reasonable assurance whether the consolidated financialstatements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor’sjudgment, including the assessment of the risks of material misstatement of the financialstatements, whether due to fraud or error. In making those risk assessments, the auditorconsiders internal control relevant to the entity's preparation of financial statements thatgive a true and fair view in order to design audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of theentity's internal control. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of accounting estimates made by theBoard of Directors, as well as evaluating the overall presentation of the financialstatements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements give a true and fair view of thefinancial position of the Group as at 31 December 2009, and of its financial performanceand its cash flows for the year then ended in accordance with International FinancialReporting Standards as adopted by the EU and the requirements of the Cyprus CompaniesLaw, Cap. 113.

Report on Other Legal and Regulatory Requirements

Pursuant to the requirements of the Cyprus Companies Law, Cap. 113, we report thefollowing:

We have obtained all the information and explanations we considered necessary forthe purposes of our audit.

In our opinion, proper books of account have been kept by the Company.

The Company's financial statements are in agreement with the books of account.

In our opinion and to the best of our information and according to the explanationsgiven to us, the financial statements give the information required by the CyprusCompanies Law, Cap. 113, in the manner so required.

In our opinion, the information given in the report of the Board of Directors isconsistent with the financial statements.

Pursuant to the requirements of the Directive DI190-2007-04 of the Cyprus Securities andExchange Commission, we report that a corporate governance statement has been madefor the information relating to paragraphs (a), (b), (c), (f) and (g) of article 5 of the saidDirective, and it forms a special part of the Report of the Board of Directors.

Other Matter

This report, including the opinion, has been prepared for and only for the Company’smembers as a body in accordance with Section 156 of the Cyprus Companies Law, Cap.113 and for no other purpose. We do not, in giving this opinion, accept or assumeresponsibility for any other purpose or to any other person to whose knowledge this reportmay come to.

PricewaterhouseCoopers LimitedChartered Accountants

Limassol, 14 April 2010

52

THE LARGEST SHAREHOLDERS AS PER 31 DECEMBER 2009

SHAREHOLDERS REGISTERED IN VPS

Citizen No. of shares: %

HEMEN HOLDING LIMITED CYP 44 583 853 34,30 %

SKAGEN KON-TIKI NOR 10 744 000 8,27 %

ORKLA ASA NOR 3 366 500 2,59 %

SVENSKA HANDELSBANKEN NOR 3 091 415 2,38 %

J.P. MORGAN CHASE BANK GBR 2 799 813 2,15 %

DNB NOR MARKETS NOR 1 783 861 1,37 %

MLPF&S NORWEGIAN USA 1 489 491 1,15 %

DNB NOR SMB NOR 1 326 392 1,02 %

SEB ENSKILDA ASA NOR 1 150 000 0,88 %

TERRA SPAR NOR 1 030 000 0,79 %

STICHTING SHELL PENSIOENFONDS GBR 1 007 000 0,77 %

CARNEGIE ASA NOR 1 000 000 0,77 %

CITIBANK USA 955 631 0,74 %

BANK OF NEW YORK BEL 782 427 0,60 %

CITIBANK GBR 780 500 0,60 %

J.P. MORGAN CHASE BANK GBR 754 200 0,58 %

DNB NOR NAVIGATOR NOR 730 174 0,56 %

NORDNET BANK AB SWE 721 165 0,55 %

NATIXIS BLEICHROEDER LLC USA 660 207 0,51 %

MP PENSJON NOR 658 800 0,51 %

Total 20 largest shareholders: 79 415 429 61,11 %

Total shares owned by Deep Sea Supply Plc: 3 101 000 2,39 %

Total other shareholders: 47 448 432 36,51 %

Total number of shares: 129 964 861 100,00 %

5353

SHAREHOLDERS REGISTERED IN VPS

THE LARGEST SHAREHOLDERS AS PER 29 MARCH 2010

Citizen No of shares %

HEMEN HOLDING LIMITED CYP 44 583 853 34,30 %

SKAGEN KON-TIKI NOR 11 096 000 8,54 %

PERESTROIKA AS NOR 5 200 000 4,00 %

ORKLA ASA NOR 3 366 500 2,59 %

SVENSKA HANDELSBANKEN NOR 3 175 415 2,44 %

DNB NOR MARKETS NOR 2 317 293 1,78 %

STICHTING SHELL PENSIOENFONDS GBR 1 442 746 1,11 %

MLPF&S NORWEGIAN CUSTODY ACCOUNT GBR 1 359 340 1,05 %

TERRA SPAR NOR 1 130 000 0,87 %

CARNEGIE ASA NOR 1 000 000 0,77 %

HETI AS NOR 800 000 0,62 %

LIVSFÖRSÄKRINGSAKTIEBOLAGET GBR 780 500 0,60 %


CITIBANK USA 733 081 0,56 %

CITIBANK NOR 658 800 0,51 %

VPF NORDEA SMB NOR 644 000 0,50 %

NORDNET BANK AB SWE 569 686 0,44 %

NATIXIS BLEICHROEDER LLC GBR 540 735 0,42 %


G STRAND EIENDOM AS NOR 500 000 0,38 %

Total 20 largest shareholders: 81 176 649 62,46 %

Total shares owned by Deep Sea Supply Plc: 3 101 000 2,39 %

Total other shareholders: 45 687 212 35,15 %

Total number of shares: 129 964 861 100,00 %

SHAREHOLDERS • ANNUAL REPORT 2009

‘The Company’s vision is to

become one of the leading

offshore supply vessel

companies on a global basis’.

54

CORPORATE GOVERNANCE • ANNUAL REPORT 2009

CORPORATE GOVERNANCE

Deep Sea Supply Plc (“DESSC” or the “Company”on a consolidated basis) principles for Corporate Governanceare based on the “Norwegian Recommendation for Corpo-rate Governance” issued on 28 November 2006, which is arevised version of the recommendations issued on the 8thDecember 2005. Listed companies are expected to practiceCorporate Governance that regulates the division of rolesbetween Shareholders, the Board of Directors and the Execu-tive Management more comprehensively than is required bythe legislation. The code of practice intends to strengthen theconfidence in listed companies providing the highest possiblevalue creation benefiting shareholders, employees and others.As long as DESSC is a Cyprus registered company, “Norwe-gian Recommendation for Corporate Governance” can onlybe adopted as long as the recommendation is in accordancewith Cyprus Companies Act. The Board of the Company isnot aware of any differences between the content of the“Norwegian Recommendation for Corporate Governance”and Cyprus Companies Act. The Board will below present itsCorporate Governance.

DESSC’s management has presented “The NorwegianCode of practice for Corporate Governance” for the Board.

The following elements underpin the Company’sCorporate Governance Policy:

• DESSC will maintain an open and reliable communicationwith the public about its business activities and conditionsrelated to corporate governance.

• DESSC’s Board will be autonomous and independent ofthe Company’s Management.

• DESSC will attach importance to avoid conflicts of interestbetween the owners, the Board and the Management.

• DESSC will have a clear division of responsibilitiesbetween the Board and the Management.

• All shareholders will be treated equally.

In 2006 the Company completed its own corporate Code ofEthics. Compliance with and follow up of the Code of Ethicshave been discussed and presented thoroughly in-house. Formore detailed information about the Company’s Code ofEthics, please see our corporate website at:www.deepseasupply.no.

Company Background

Deep Sea Supply Plc was established on 7 November 2006for the purpose of acquiring all shares of Deep Sea SupplyASA following an initiative by the Board of Deep Sea SupplyASA to change the domicile of the ultimate parent companyto Cyprus. Cyprus is expected to afford more stable, attrac-tive and competitive conditions over time compared to theNorwegian regime. It was also considered vital that Cyprus isan EU member.

Business

The Company’s business objective is defined in Section 3 ofthe Memorandum of Association, and includes, inter alia, thefollowing;

“To engage and invest, directly or indirectly, by itself orthrough subsidiaries or part-owned companies, partnerships orother forms of entities, in the international offshore anchor han-dling and supply vessel business, and to do all such acts andthings as are related thereto, including without limitation theacquisition, construction, leasing, chartering, operation and man-ning of such vessels and everything incidental thereto.”

In 2005 the Company acquired a fleet of modern secondhand AHTS (Anchor Handling Tug Supply vessels) built inNorway in 1998/99. The vessels are operating in the NorthSea and internationally. In April 2006 the Company enteredinto a contract to purchase 22 newbuildings, whereof 8 PSVs(Platform Supply Vessels) and 14 AHTS. The Companyacquired in 2006 and 2007 another 4 shipbuilding contracts,one second hand vessel and bareboat chartered in (and lateracquired) one vessel. In 2006, the Company sold three ship-building contracts and in 2007, the Company sold two vessels.In 2009, the Company ordered a newbuilding PSV from STXOffshore Brasil S.A.

The Company intends to become one of the leadingowners and operators of supply vessels on a global basis.DESSC will primarily seek to obtain and maintain a charteringprofile with a combination of spot, medium and long termcontracts for the large AHTS vessels operating in the NorthSea and in other areas of the world. For the PSVs and thesmall AHTS vessels, DESSC will seek to obtain medium tolong term contracts.

The Company’s primary aims are to meet the demandfrom markets that require modern and advanced supply ves-sels.

DESSC seeks investments in the perspective of providingfinancial returns to its shareholders. The Company will activelyconsider possibilities to participate in industry consolidation,mergers and acquisitions, and will position itself to be part ofsuch consolidation.

The Company has, and will continue to have, a small teamof dedicated staff focusing on core activities such as charter-ing, finance, investor relations, accounting and monitoringexternal suppliers. Other services like technical management,crew management, construction and construction supervisionare outsourced to well-qualified professional suppliers of suchservices.

55

56

Equity and dividend

EquityThe Company’s book equity as per 31 December 2009 wasUSD 164 mill. The Board considers this to be an acceptablelevel. The Board evaluates continuously the Company’s equityin light of the overall goals, strategy, risk profile and market.

Dividend policyThe Company will actively use the capital market when doinginvestments, and does not intend to hold significant liquidreserves for investments. Retained earnings will, to the extentpermitted under operational constraints, financial covenantsand with due regard to appropriate working capital require-ments and, more recently, the uncertainties deriving from thecurrent financial crises and adverse market conditions, be paidout as dividends.

The General Meetings stipulates the annual dividend,based on the Board’s recommendation. Distributions toshareholders for 2009 have been evaluated quarterly.

For 2009, no dividend distributions were made due to theadverse market conditions resulting in lower utilization andrate levels for AHTS and PSVs after the financial turmoil andfurthermore the lack of visibility in the equity markets.

Purchase of treasury sharesThe Board has been granted an authorization to acquiretreasury shares, including acquisition of security rights. Authorization to acquire treasury shares is based on theassumption that acquisitions will be conducted at normal mar-ket conditions.

By the end of 2009, DESSC owned 3,101,000 own sharesacquired in 2007. The shares were acquired in the market.

International financial turmoilLate 2008, the world experienced a financial turmoil with sig-nificant impact on the stock markets, the oil price, the bankingsector etc. Such financial turmoil impacted negatively on theactivity level in the offshore sector and especially from secondhalf of 2009. The utilization and rate levels were negativelyimpacted as a consequence. The financial turmoil has alsoresulted in cancellation of shipbuilding contracts and certainshipyards have had severe financial problems.

Equal treatment of shareholders and transac-tions between related parties

Class of sharesDESSC’s shares are all equal. The Articles of Association placeno restrictions on voting rights or rights of receiving dividends.

Trading in treasury sharesThe Board’s authorization to acquire treasury shares is basedon the assumption that acquisitions will be conducted at normal market conditions.

Transactions between related parties:Related parties are considered to be the Board members(including associated companies) and the Management(including associated companies).

Ship Finance International Limited (“SFI”)DESSC has entered a sale and leaseback transaction with SFIfor 5 offshore supply vessels in 2007 (of which one was sold)and another two AHTS vessels in 2008. SFI’s largest share-holder is Hemen Holding Ltd. who is also DESSC’s largestshareholder.

Tidewater MarineDESSC has an agreement related to technical management ofsome of the offshore supply vessels with Tidewater Marine.DESSC acquired 6 AHTS vessels from Tidewater in 2005.

Hemen Holding Limited / Metrogas Holdings Inc.In connection with the Company’s change of domicile fromNorway to Cyprus, Metrogas Holdings Inc issued in January2007 a short term loan facility to DESSC which amounted toUSD 25,6 mill. The purpose of the loan was to make relevantdeposit for the purpose of conducting the mandatory bid forall of the shares in Deep Sea Supply ASA. Metrogas HoldingsInc is a Greenwich Holding Ltd subsidiary and sister companyof Hemen Holding Ltd, the owner of 99,9 percent of shares inMetrogas Holding Inc and the owner of 34,30% of the sharesin the DESSC. The loan agreement is entered into on anarms-length-basis. The loan was fully repaid in mid March2007. In 2008, DESSC borrowed USD 12 mill. from MetrogasHoldings Inc (a company controlled by DESSC’s largest share-holder) and repaid the loan in full prior to year-end 2008.

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CORPORATE GOVERNANCE • ANNUAL REPORT 2009

Freely negotiable

The shares are freely negotiable.

General meetings

By virtue of the Annual General Meeting (AGM), the share-holders are guaranteed participation in the Company’ssupreme governing body. Shareholders representing at least10 per cent of the shares can call for an extraordinary generalmeeting. The AGM shall be held at the place of establishmentof the Company (Cyprus).

Convening letterThe notifications to the AGM are distributed to all sharehold-ers minimum 21 days in advance. It is considered importantthat the documents contain all relevant documentation sothat the shareholders can take a position on all items up fordiscussion. The Finance Calendar is published on the Com-pany’s web page and distributed via Oslo Børs.

ParticipationIt is possible to register for the AGM by post, telefax or e-mail.The Board and at least one member of the NominationCommittee will attend the AGM. As a minimum, the manage-ment is represented by the CEO and the CFO.

Agenda and executionThe agenda is set by the Board, and the main items are speci-fied in the Company’s Articles of Association. The Chairman ofthe Board will chair the AGMs.

Nomination Committee

In accordance with the Articles of Association, the Companyshall have a nomination committee consisting of the Chair-man of the Board and two members elected by the AGM. Inconnection with the election of Directors and election of themembers to the Nomination Committee, the NominationCommittee shall in connection with the summons for theGeneral Meeting provide its recommendations for candidates.The nomination committee shall also propose the remunera-tion of the Board.

The Board has established an audit committee who hadfour meetings in 2009. The meetings were held together withthe Management and the Company’s Auditors.

Board of Directors -composition and independence

The DESSC Board consists of five board members.

Election of the Board of DirectorsThe Board members are elected by the AGM based on a rec-ommendation prepared and presented by the NominationCommittee. The recommendation is distributed to the share-holders along with the convening letter to the AGM. Deci-sions on the composition of the Board require a simplemajority. Directors are elected for two-year terms and can bere-elected.

Composition of the BoardEmphasis is made on selecting board members with relevantcompetence. According to the Articles of Association, theBoard shall have from three to seven board members. TheCompany’s CEO is not member of the Board.

The Board’s autonomyThe Board considers itself autonomous and independent ofthe Company’s executive management and main sharehold-ers. Emphasis is made that there should exist no conflictsbetween owners, the Board, the Management and the Com-pany’s shareholders. The corporate Code of Ethics discussesthe topic under the heading of conflict of interest.

Director’s ownership of sharesBy year-end 2009, the members of the Board either ownedshares in the Company or represented significant sharehold-ers. Reference is furthermore made to the separate presenta-tion of the Board Members in the Annual Report.

Board work

Board responsibilitiesThe Board bears the ultimate responsibility for running theCompany and supervising routine management and businessactivities. The Board primarily looks after the interests of all theshareholders, but is also responsible for the Company’s other

stakeholders.

The Board has made an annual plan for the board meet-ings. The Board’s main tasks are developing and determiningthe Company’s strategy, performing the required control func-tions and advise the executive management. The Board isresponsible for employing the Company’s CEO and to drawup his/her job description. The Board members receive afixed compensation and have a total of 733,333 stock options.Stock options were deemed necessary in order to attractgood foreign board members. DESSC’s Board of Directorsconsistconsists of 1 Cyprus, 1 Norwegian and 3 UK residents.

Remuneration to leading employees

The remuneration for the CEO is decided by the Board. Eachyear, the Board undertakes a thorough review of salary andother remuneration to the CEO. An incentive scheme for theemployees is established which is linked to a combination ofstock options and a bonus scheme. The bonus scheme islinked to the development of the stock price of the Companybased on comparison with peer company companies. Theterms are described in the notes of the annual financial state-ments.

Remuneration to the members of the Board

The AGM stipulates the Board’s remuneration each year. Thesuggested remuneration to the Board in 2009 breaks down asfollows: NOK 350,000 for the Chairman and NOK 200,000for each Director. In addition, each board member has stockoptions (200,000 for the chairman and 133,333 for eachDirector).

No Director is engaged in any paid consultancy work orother assignments for the Company.

Change of control

The share options for the board and the share options andcertain other benefits for the management will come intoeffect at a change of control in the Company.

Information and communicationThe Company considers an open and frequent communica-tion as important to its shareholders and other related par-ties. The Company’s Financial Calendar is published on theCompany’s website and communicated via Oslo Børs.Monthly information about vessel revenues, medium and longterm charters, delivery of vessels etc isare provided via OsloBørs. The web-site contains financial and other informationrelevant for its shareholders and related parties.

Open presentations are arranged to present quarterly finan-cial statements. Present at these presentations are the CEOand the CFO. The presentations are simultaneously madeavailable on the Company’s web-site.

It is considered essential to keep owners and investorsinformed about the Company’s progress and financial status.Emphasis is made on presenting the same information to theentire equity market at the same time.

Take-over regulation

There are no defense mechanisms against take-over bids inthe Company’s Article of Associations, and the Company hasnot implemented other measures to limit the opportunity toacquire shares in the Company.

The EU Directive 2004/25/EC of the European Parliamentand of the Council of 21 April 2004 on take-over bids isimplemented in Norway through the Securities Trading Act of29 June 2007 no. 79 (the “Norwegian Securities Trading Act”)and in Cyprus through Cypriot Law 41 (I)/2007 on TakeoverBids. A brief summary of the take-over rules applicable to theCompany is included below.

Any person, entity or group acting in concert that acquires30% or more of the voting rights of the Company is requiredto make an unconditional general offer for the purchase of

the remaining shares in the Company. The offer is subject toapproval by Oslo Børs, in its capacity as competent take-overauthority of Norway. The offer price per share must be at leastas high as the highest price paid or agreed by the offeror inthe six-month period prior to the date the 30% thresholdwas reached, however equal to the market price if the marketprice was higher at that time. In the event that the acquirerthereafter, but prior to the expiration of the acceptanceperiod acquires, or agrees to acquire, additional shares at ahigher price, the acquirer is obliged to restate its offer at thathigher price. A mandatory offer must be in cash or contain acash alternative at least equivalent to any other considerationoffered. Payment of the offer price must be guaranteed by abank.

Certain provisions regarding mandatory offers will alsoapply with respect to so called voluntary offers (i.e. offers thatwill trigger the mandatory offer obligation should the offer beaccepted by the eligible shareholders.)

Auditor

The Company emphasizes a frequent and open dialoguebetween the Company and its auditor. The Company’s auditorparticipates in the board meetings where the annual financialstatements are discussed. At such meetings, the auditor isbriefing the Board on the annual accounts and any otherissues of particular concern to the auditor. At least once a yearthe auditor presents to the Board a written report of theCompany’s accounting policies, risk areas and internal controlroutines.

The auditor submits the main features of the plan for theaudit of the Company to the Board annually. The auditorannually presents for the Board a written confirmation thatthe auditor continues to satisfy the requirements for inde-pendence.

At least one meeting a year will be held between the audi-tor and the Board without the presence of the CEO or otherexecutive managers.

The Company’s auditor is Pricewaterhouse Coopers(PwC). There has been no change in audit firm after the Com-pany was established in 2004.

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1 Pursuant to section 6-14 (2), cfr. section 6-13 (3), of the Norwegian Securities Regulations of 29 April 2007 no. 876, any mat-ters regarding information to employees as well as company law matters, such as the conditions for triggering the mandatoryoffer obligation, shall be regulated by relevant Cypriot legislation. Such matters will be under the supervision of the CypriotSecurities and Exchange Commission. Pursuant to Article 13 (1) of the Cypriot Law 41 (I)/2007 on takeover bids, any personwho, as a result of own acquisition or acquisition by a person acting in concert with him, holds securities of a company which,adding to his existing holding and those of persons acting in concert with him, directly or indirectly gives him 30% or more of thevoting rights of that company, is obliged to make a bid for the outstanding securities. There is no repeated offer obligation underrelevant Cypriot legislation.

‘The Company will focus on

acknowledged Safety Standards

developed during recent years within the

Offshore Marine Industry world wide,

and in particular in the North Sea area’.

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‘The Company’s primary aims are

to meet the demand from the

markets that require modern and

advanced offshore vessels’.

DEEP SEA SUPPLY PlcANNUAL REPORT 2009

61

DEEP SEA SUPPLY PLC • ANNUAL REPORT 2009

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REPORT FROM THE BOARD OF DIRECTORS

Principle activitiesDeep Sea Supply PLC’s (“the Company”) principal activity isthe holding of investments.

Principle risks and uncertaintiesAs the Company’s main income is dividend received from itssubsidiaries, the Company is exposed to the performance ofthose subsidiaries. The Company’s subsidiaries operate in theinternational offshore supply vessel business and henceexposed to charter rate risk.

Results, review of developments, position and perform-ance of the Company’s business

The main income for the period was dividend receivedfrom the subsidiaries of the Company USD 67.5 million(2008: USD 59.3 million).

The other gains/(losses)/gains comprises mainly from gainon sale (2008: fair value loss) on financial assets at fair valuethrough profit and loss; The Company has throughout 2009

sold the shares in an offshore supply company classified asfinancial assets at fair value through profit. and loss.

The reduced amounts due and from related parties inconjunction with reduced interest rates applied in 2009resulted in lower financial income and lower financialexpenses compared to 2008.

The Company’s net result for the year is set out at page 65.

DividendsDividend policy and distributions made in 2009The Company intends to actively use the capital market whendoing investments, and does not intend to hold liquid reservesfor significant investments. Retained earnings will, to theextent permitted under operational constraints, financialcovenants and with due regard to appropriate working capitalrequirements, be distributed to shareholders as dividend.

There were no dividends distributions made in 2009.

The Board of Directors presents its report together with the audited financialstatements of the Company for the year ended 31 December 2009.

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Svein Aaser Frixos Savvides Kathrine Fredriksen Chairman

Anna Cecilie Holst Bjørn Giaever

Finn Amund Norbye Espen SkadalChief Executive Officer Chief Financial Officer


The Board of Deep Sea Supply PLC

Board of directorsThe members of the Board of Directors at 31 December 2009and at the date of this report are shown on page 6. KathrineFredriksen entered the Board at the Annual General Meeting inMay 2009.

Events after the balance sheet dateThere were no material events which occurred after the end ofthe financial year.

AuditorsThe Independent Auditors, PricewaterhouseCoopers Limited,have expressed their willingness to continue in office. A resolu-tion giving authority to the Board of Directors to fix their remu-neration will be proposed at the Annual General Meeting.

Responsibility statement:In accordance with Article 9, sections (3)(c) and (7) of theTransparency Requirements (Securities for Trading on Regu-lated Market) Law of 2007 (“Law”), we the members of theBoard of Directors and the other responsible persons for thefinancial statements of the Company for the year ended 31December 2009 we confirm that, to the best of our knowledge:

a) The annual financial statements that are presented onpages 64 to 79:

(I) were prepared in accordance with the InternationalFinancial Reporting Standards as adopted by the Euro-pean Union, and in accordance with the provisions ofArticle 9, section (4) of the Law, and

(II) give a true and fair view of the assets and liabilities, thefinancial position and the profit or losses of the Company,and

b) the director’s report gives a fair view of the develop-ments and performance of the business as well as thefinancial position of the Company, together with adescription of the principal risks and uncertainties thatthey are facing.

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BALANCE SHEET - Deep Sea Supply Plc (Parent Company)


31 December 31 December

Note 2009 2008ASSETSNon-Current Assets

Investments in subsidiaries 4 213 403 116 598

Total non current assets 213 403 116 598

Current assetsFinancial assets at fair value through profit and loss 5 0 6 335Amounts due from related parties 13 8 141 175 642Cash and cash equivalents 6 299 8 750Total current assets 8 439 190 727

Total assets 221 842 307 326

EQUITYCapital and reserves attributable to equity holders of the companyShare Capital 7 2 599 2 599Share premium 139 589 139 589Treasury shares -9 787 -9 787Other paid in capital 1 720 1 242Retained earnings 86 953 6 337Total equity 221 074 139 980

LIABILITIES

Current LiabilitiesAmounts due to related parties 13 676 152 807Other short term payables 9 92 14 539Total current liabilities 768 167 346

Total liabilities 768 167 346

Total equity and liabilities 221 842 307 326

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INCOME STATEMENT - Deep Sea Supply Plc (Parent Company)


Note 2009 2008

Dividend income 67 500 59 261

Administrative expenses 12 -2 537 -3 782

Other (losses)/gains - net 10 8 456 -11 549

Operating profit 73 419 43 930

Financial income 11 7 760 15 649

Financial expenses 11 -563 -14 102

Finance costs - net 7 197 1 547

Profit before income tax 80 616 45 478

Income tax 0 0

Profit for the year / period 80 616 45 478

Earnings per share for profit attributable to the equity holders of the Company, expressed in USD per share

USD per share USD per share

-Basic 0,64 0,36

-Diluted 0,63 0,36

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STATEMENT OF CHANGES IN EQUITY - (Parent Company)

ShareCapital

Share premiumreserves

Treasury shares

Other paid-in-equiy

Retainedearnings Total

Balance at 1 January 2008 2 639 190 334 -9 787 231 261 183 678Result for the year 45 478 45 478Total comprehensive income for the year ended 31 December 2008 45 478 45 478Cancelation of own shares (non traded) -40 -40Value of share option scheme, issued in December 2007 1 011 1 011

Payment of dividend -50 746 -39 404 -90 150Balance at 31 December 2008 2 599 139 589 -9 787 1 242 6 336 139 980

Balance at 1 January 2009 2 599 139 589 -9 787 1 242 6 336 139 980Total comprehesive income for the year ended 31 December 2009 80 616 80 616Valuation of share option scheme 478 478Balance at 31 December 2009 2 599 139 589 -9 787 1 720 86 952 221 074

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CASH FLOW STATEMENT - (Parent Company)


Year ended 31December

Year ended 31December

Note 2009 2008Cash flows from operating activities

Profit for the year 80 616 45 478

Fair value losses on financial derivatives 0 3 357Fair value losses/(gains) on financial assets at fair value through profit and loss -8 456 8 192Currency gains/(losses) 2 965 -507Changes in working capitalTrade and other receivables 83 001 -31 410Trade and other payables -166 578 162 606

Cash generated from operations -8 451 187 715

Cash flow from investing activitiesAcquisitions of shares in wholly owned subsidiaries 0 -14

Net Cash used in investing activities 0 -14

Cash flows from financing activitiesPayment of dividend to shareholders 0 -140 896Repayments of borrowings 0 -39 338

Net cash from financing activities 0 -180 234

Total changes in liquidity in the year -8 451 7 467

Cash and cash equivalents at beginning of year 8 750 1 283

Cash and cash equivalents at end of the year 6 299 8 750

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1. General information

Deep Sea Supply PLC’s (“the Company”) principal activitiesare to engage and invest, directly or indirectly, by itself orthrough subsidiaries or part-owned companies, partnershipsor other forms of entities, in the international offshore supplyvessel business.

The Company was incorporated as a public limited liabilitycompany on 7 November 2006 and is domiciled in Cyprus inaccordance with the provisions of the Companies Law, Cap.113. Its registered office is at John Kennedy, Iris House, 7thFloor, Limassol, Cyprus.

The Company was established for the purpose ofacquiring all shares of Deep Sea Supply ASA.

The Company has its primary and only listing on the OsloStock Exchange.

These financial statements have been approved for issueby the Board of Directors on 14 April 2010.

The Company has also prepared consolidated financialstatements in accordance with International FinancialReporting Standards as adopted by the EU for the Companyand its subsidiaries (the “CompanyGroup”). The consolidatedfinancial statements can be obtained from the Company’sregistered office.

Users of these parent’s separate financial statementsshould read them together with the Company’s consolidatedfinancial statements as at and for the year ended 31December 2009 in order to obtain a proper understanding ofthe financial position, the financial performance and the cashflows of the Company and the Group.

2.1 Statement of compliance andbasis of preparation

Basis of preparationThe financial statements of the Company have been preparedin accordance with International Financial Reporting Stan-dards (IFRS), as adopted by the European Union (EU), and therequirements of the Cyprus Companies Law, Cap. 113.

As of the date of the authorisation of the financial state-ments, all International Financial Reporting Standards issuedby the International Accounting Standards Board (IASB) thatare effective as of 1 January 2009 have been adopted by theEU through the endorsement procedure established by theEuropean Commission, with the exception of certain provisi-ons of IAS 39 “Financial Instruments: Recognition and Measu-rement” relating to portfolio hedge accounting.

In addition, the following interpretations have been endor sed,however their effective dates are not the same, although an entity may choose to early adopt them:

(i) IFRIC 12 “Service Concession Arrangements”;(ii) IFRIC 15 “Agreements for the construction of real estate”;

and(iii) IFRIC 16 “Hedges of a Net Investment in a Foreign

Operation”.

The financial statements have been prepared under the histo-rical cost convention, as modified by the revaluation of landand buildings, investment property, available for sale financialassets and financial assets at fair value through profit or loss.

2. Accounting principles

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The preparation of financial statements in conformity withIFRSs requires the use of certain critical accounting estimatesand requires management to exercise its judgment in the pro-cess of applying the Company's accounting policies. The areasinvolving a higher degree of judgment or complexity, or areaswhere assumptions and estimates are significant to the finan-cial statements are disclosed in Note 4.

Adoption of new and revised IFRSsDuring the current year the Company adopted all the newand revised International Financial Reporting Standards (IFRS)that are relevant to its operations and are effective foraccounting periods beginning on 1 January 2009. This adop-tion did not have a material effect on the accounting policiesof the Company, with the exception of the following:(i) IAS 1 (revised) “Presentation of financial statements”, as a

result of the adoption of which, the Company presents inthe statement of changes in equity all owner changes inequity, whereas all non owner changes in equity are pre-sented in the statement of comprehensive income. Com-parative information has been re presented so that it isalso in conformity with the revised standard. The change inthe accounting policy impacts only presentation aspects.

(ii) IFRS 7 “Financial Instruments Disclosures” (amendment),as a result of the adoption of which, the Company provi-des additional disclosures in relation to the fair value mea-surements of its financial instruments by level of a fairvalue measurement hierarchy.

(iii) IAS 23 (revised) “Borrowing costs”, as a result of whichthe Company capitalises borrowing costs directly attribu-table to the acquisition, construction or production of aqualifying assets as part of the cost of that asset. The Com-pany previously recognized all borrowing costs as anexpense immediately. This change in accounting policy hasbeen made in accordance with the transitional provisionsof IAS 23 (revised) and therefore comparative figureshave not been restated. The Company has capitalised bor-rowing costs with respect to buildings under construction.

At the date of approval of these financial statements the follo-wing accounting standards were issued by the InternationalAccounting Standards Board but were not yet effective:(i) Adopted by the European Union

New standards• IFRS 3 (Revised) “Business Combinations” (effective for

annual periods beginning on or after 1 July 2009).• IAS 27 (Revised) “Consolidated and Separate Financial Sta-

tements” (effective for annual periods beginning on orafter 1 July 2009).

• IFRS 1 (Revised) “First Time Adoption of International Finan-cial Reporting Standards” (effective for annual periodsbeginning on or after 1 July 2009).

Amendments• Annual improvements to IFRS (2008) re IFRS 5 “Non cur-

rent Assets Held for Sale and Discontinued Operations”(effective for annual periods beginning on or after 1 July2009).

• Amendment to IAS 39 “Financial Instruments: Recognitionand Measurement” on “Eligible Hedged Items” (effectivefor annual periods beginning on or after 1 July 2009).

• Amendment to IFRIC 9 and IAS 39 regarding embedded

derivatives (effective for annual periods beginning on orafter 30 June 2009).

• Amendments to IAS 32 “Financial Instruments: Presentation:Classifications of Rights Issues” (effective for annual peri-ods beginning on or after 1 February 2010).

• Annual Improvements 2009 (effective for annual periodsbeginning on or after 1 July 2009 to 1 January 2010).

• Amendments to IFRS 2 “Group Cash settled Share basedPayment Transactions” (effective for annual periods begin-ning on or after 1 January 2010).

New IFRICs• International Financial Reporting Interpretation Committee

(IFRIC) 12 “Service Concession Arrangements” (effectivefor annual periods beginning on or after 1 January 2008,EU: 30 March 2009).

• IFRIC 15 “Agreements for the Construction of Real Estate”(effective for annual periods beginning on or after 1 Janu-ary 2009, EU: 31 December 2009).

• IFRIC 16 “Hedges of a Net Investment in a Foreign Opera-tion” (effective for annual periods beginning on or after 1October 2008, EU: 30 June 2009).

• IFRIC 17 “Distributions of Non cash Assets to Owners”(effective for annual periods beginning on or after 1 July2009).

• IFRIC 18 “Transfers of Assets from Customers” (effective forannual periods beginning on or after 1 July 2009).

(ii) Not adopted by the European Union

New standards• IAS 24 (Revised) “Related Party Disclosures” (effective for

annual periods beginning on or after 1 January 2011).• IFRS 9 “Financial Instruments” (effective for annual periods

beginning on or after 1 January 2013).

Amendments• Amendment to IFRIC 14 Prepayments of a Minimum Fun-

ding Requirement (effective for annual periods beginningon or after 1 January 2011).

• Amendments to IFRS 1 “Additional Exemptions for Firsttime Adopters” (effective for annual periods beginning onor after 1 January 2010).

• Amendment to IFRS 1 “Limited Exemption from Compara-tive IFRS 7 Disclosures for First Time Adopters” (effectivefor annual periods beginning on or after 1 July 2010).

New IFRICs• IFRIC 19 “Extinguishing Financial Liabilities with Equity

Instruments” (effective for annual periods beginning on orafter 1 July 2010).

The Board of Directors expects that the adoption of theseaccounting standards in future periods will not have a materialeffect on the financial statements of the Company.

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2.2 Underlying concepts

The financial statements are prepared on the going concernbasis using accrual accounting.

Assets and liabilities and income and expenses are not off-set unless specifically permitted by an accounting standard.

Financial assets and financial liabilities are offset and thenet amount reported only when a legally enforceable right toset off exists and the intention is either to settle on a net basisor to realize the asset and settle the liability simultaneously.

Changes in accounting policies are accounted for in accor-dance with the transitional provisions in the IFRS standards. Ifno such guidance is given, they are applied retrospectively,unless it is impracticable to do so, in which case they areapplied prospectively.

2.3 Investments in subsidiaryundertakings

Subsidiaries are those entities in which the Company has aninterest of more than one half of the voting rights or other-wise has power to govern the financial and operating policies.

Investments in subsidiary undertakings are stated at costand provision is only made where, in the opinion of the Direc-tors, there is an impairment in their value.

2.4 Revenue recognition

Dividend incomeDividend income is recognized when the right to receive pay-ment is established.

Interest incomeInterest income is recognized on a time-proportion basisusing the effective interest method. When a receivable isimpaired, the Company reduces the carrying amount to itsrecoverable amount, being the estimated future cash flow dis-counted at the original effective interest rate of the instru-ment, and continues unwinding the discount as interestincome. Interest income on impaired loans is recognized usingthe original effective interest rate.

2.5 Recognition of assets andliabilities

Assets are only recognized if they meet the definition of anasset, it is probable that future economic benefits associatedwith the asset will flow to the Company and the cost or fairvalue can be measured reliably.

Liabilities are only recognized, if they meet the definition ofa liability, it is probable that future economic benefits associa-ted with the liability will flow from the entity and the cost orfair value can be measured reliably.

2.6 Valuation and classification of assets and liabilitiesAssets intended for long-term ownership or use areis clas-

sified as non-current. Other assets are classified as current.Receivables due to be repaid within one year are classified ascurrent assets.

Non-current assets are stated at historic cost price, but writ-ten down to recoverable amount when the fall in value is con-sidered to be permanent. Such write-downs are reversedwhen the reason for the write-down no longer applies.

2.7 Foreign exchange translation

Foreign currency translation(i) Functional and presentation currency

Items included in the Company's financial statements aremeasured using the currency of the primary economicenvironment in which the entity operates (“the functionalcurrency”). The financial statements are presented in Uni-ted States dollars (US$), which is the Company's functio-nal and presentation currency.

(ii) Transactions and balancesForeign currency transactions are translated into the func-tional currency using the exchange rates prevailing at thedates of the transactions. Foreign exchange gains and los-ses resulting from the settlement of such transactions andfrom the translation at year end exchange rates of mone-tary assets and liabilities denominated in foreign curren-cies are recognized in the income statement.

2.8 Financial assets

The Company classifies its financial assets in the followingcategories: at fair value through profit or loss, loans and recei-vables, and available for sale. The classification depends on thepurpose for which the financial assets were acquired. Manage-ment determines the classification of its financial assets at ini-tial recognition and re-evaluates this designation at everyreporting date.

(a) Financial assets at fair value through profit or lossThis category has two sub-categories: financial assets held fortrading, and those designated at fair value through profit orloss at inception. A financial asset is classified in this category ifacquired principally for the purpose of selling in the shortterm or if so designated by management, and they meet cer-tain criteria (IAS 39.9).Derivatives are also categorized as heldfor trading unless they are designated as hedges. Assets in thiscategory are classified as current assets if they are either heldfor trading or are expected to be realized within 12 monthsof the balance sheet date.

(b) Loans and receivablesLoans and receivables are non-derivative financial assets withfixed or determinable payments that are not quoted in anactive market. They are included in current assets, except formaturities greater than 12 months after the balance sheetdate. These are classified as non-current assets. Loans andreceivables are classified as ‘trade and other receivables’ in thebalance sheet.

(c) Available-for-sale financial assetsAvailable-for-sale financial assets are non-derivatives that areeither designated in this category or not classified in any of theother categories. They are included in non-current assetsunless management intends to dispose of the investment wit-hin 12 months of the balance sheet date.

71


Purchases and sales of financial assets are recognized on thetrade-date, the date on which the Company commits to pur-chase or sell the asset. Investments are initially recognized atfair value plus transaction costs for all financial assets not car-ried at fair value through profit or loss. Financial assets carriedat fair value through profit or loss, are initially recognized atfair value, and transaction costs are expensed in the incomestatement. Financial assets are derecognized when the rightsto receive cash flows from the investments have expired orhave been transferred and the Company has transferred sub-stantially all risks and rewards of ownership. Available-for-salefinancial assets and financial assets at fair value through profitor loss are subsequently carried at fair value. Loans and recei-vables are carried at amortized cost using the effective inte-rest method. Gains or losses arising from changes in the fairvalue of the “financial assets at fair value through profit or loss”category are presented in the income statement within other(losses)/gains – net, in the period in which they arise. Divi-dend income from financial assets at fair value through profitor loss is recognized in the income statement as part of otherincome when the Company’s right to receive payment is esta-blished.

The Company assesses at each balance sheet date whet-her there is objective evidence that a financial asset or a groupof financial assets is impaired.

Derivative financial instrumentsDerivatives are initially recognized at fair value on the date aderivative contract is entered into and are subsequently re-measured at their fair value. The method of recognising theresulting gain or loss depends on whether the derivative isdesignated as a hedging instrument, and if so, the nature of theitem being hedged. The Company designates certain derivati-ves as either : (1) hedges of the fair value of recognized assetsor liabilities or a firm commitment (fair value hedge); (2) hed-ges of a particular risk associated with a recognized asset orliability or a highly probable forecast transaction (cash flowhedge); or (3) hedges of a net investment in a foreign opera-tion (net investment hedge).

As of 31 December 2009 and 2008, the Company did nothave any derivative transactions that qualified for hedgeaccounting under IAS 39. Changes in the fair value of thesederivative instruments are recognized immediately in theincome statement.

When the Company provides guarantees for any lossessuffered in derivatives due to breach of contract, a provision ismade when the loss becomes probable.

2.9 Cash and cash equivalents

Cash and cash equivalents, includes cash in hand and depositsheld at call with banks.

2.10 Share capital

Ordinary shares are classified as equity.Costs directly attributable to the issue of new shares or opti-ons are shown in equity as a deduction, net of tax, from theproceeds.

2.11 Borrowings

Borrowings are recognized initially at fair value, net of transac-tion costs incurred. Borrowings are subsequently stated atamortized cost; any difference between the proceeds (net oftransaction costs) and the redemption amount is recognizedin the income statement over the period of the borrowingsusing the effective interest method.

Borrowings are classified as current liabilities unless theCompany has an unconditional right to defer settlement ofthe liability for at least 12 months after the balance sheet date.

2.12 Trade payables

Trade payables are recognized initially at fair value and subse-quently measured at amortized cost using the effective inte-rest method.

2.13 Taxation

The tax expense for the period comprises current and defer-red tax. Tax is recognized in the income statement, except tothe extent that it relates to items recognized directly in equity.In this cases, the tax is also recognized in equity.

The current income tax is calculated on the basis of thetax laws enacted or substantively enacted at the balance sheetdate in the country where the Company operates and gene-rates taxable income. Management periodically evaluatespositions taken in tax returns with respect to situations inwhich applicable tax regulation is subject to interpretation. Itestablishes provisions where appropriate on the basis ofamounts expected to be paid to the tax authorities.

Deferred income is recognized, using the liability method,on temporary differences arising between the tax bases ofassets and liabilities and their carrying amounts in the financialstatements. However, the deferred income tax is not accoun-ted for if it arises from initial recognition of an asset or liabilityin a transaction other than a business combination that at thetime of the transaction affects either accounting nor taxableprofit or loss. Deferred income tax is determined using taxrates (and laws) that have been enacted or substantially enac-ted by the balance sheet date and are expected to applywhen the related deferred income tax asset is realized or thedeferred income tax liability is settled.

Deferred income tax assets are recognized only to theextent that it is probable that future taxable profit will be avai-lable against which the temporary differences can be utilized.

2.14 Provisions

Provisions represent liabilities of uncertain timing or amount.Provisions are recognized when the Company has a pre-

sent legal or constructive obligation, as a result of past event,for which it is probable that an outflow of economic benefitswill be required to settle the obligation, and a reliable estimatecan be made for the amount of the obligation.

The Company’s normal business exposesd it to various finan-cial risks.

Currency rate riskThe main risk is the currency rate risk. The Company is

exposed to that risk mainly due to the amounts due to andform related parties. The main currencies that the company isexposed to is Norwegian Kroner (NOK) and Euro (EUR). Avariation of +/- 10% in the rate of exchange of USD/NOKwould affect the Company by USD 50 thousand in 2009(2007: USD 250 thousand). A variation of +/- 10% in the rateof exchange of USD/EUR would affect the Company by USD35 thousand in 2009 (2008: USD 15 thousand).

Interest rate riskThe Company is exposed to interest rate risk but since theCompany does not intend to hold material liquid reservesand has no borrowings the effect of interest rate movementsis immaterial.

Provisions are measured at the present value of the expendi-tures expected to be required to settle the obligation using apre-tax rate that reflects current market assessments of thetime value of money and the risks specific to the obligation.The increase in the provision due to passage of time is recog-nized as interest expense.

2.15 Dividend income

Dividend income is recognized when the right to receive pay-ment is established.

2.16 Dividend distribution

Dividend distribution to the Company’s shareholders isrecognized as a liability in the Company’s financial statementsin the period in which the dividends are approved by theCompany’s shareholders until payment is made.

2.17 Earnings per share

Earnings per share are calculated by dividing the net profit/lossfor the Company by the average weighted number of out-standing shares over the period in question. Diluted earningsper share include the effect of the assumed conversion ofpotentially dilutive instruments such as stock options. Theimpact of share equivalents is computed using the treasurystock method for share options.

2.18 Statement of cash flowThe statement of cash flow is presented in accordance withthe indirect method.

2.19 Derivative financial instruments of assets Derivatives are initially recognized at fair value on the date aderivative contract is entered into and are subsequently re-measured at their fair value. The method of recognising theresulting gain or loss depends on whether the derivative isdesignated as a hedging instrument, and if so, the nature of theitem being hedged. The Company designates certain derivati-ves as either : (1) hedges of the fair value of recognized assetsor liabilities or a firm commitment (fair value hedge); (2) hed-ges of a particular risk associated with a recognized asset orliability or a highly probable forecast transaction (cash flowhedge); or (3) hedges of a net investment in a foreign opera-tion (net investment hedge).As of 31 December 2009 and2008, the Company did not have any derivative transactionsthat qualified for hedge accounting under IAS 39. Changes inthe fair value of these derivative instruments are recognizedimmediately in the income statement.

When the Company provides guarantees for any lossessuffered in derivatives due to breach of contract, a provision ismade for the fair value of the derivative when the loss beco-mes probable.

2.20 Comparatives

Where necessary, comparative figures have been adjusted toconform to changes in presentation in the current year.

7272

3. Financial risk management

74

2009 2008

Cyprus based companies

DESS Cyprus Ltd 70 002 2

DESS PSV Ltd 45 002 2

Deep Sea Supply Management (Cyprus) Ltd 15 15

DESS Sea Eagle Ltd 1 0

Norwegian based companies

Deep Sea Supply AS 0 116 580

Deep Sea Supply Management AS 98 323 0

Brazilian based companies

Deep Sea Supply Servicos Maritimos Ltda 60 0

Total 213 403 116 598

Cyprus based companiesDuring the year, the DESS Cyprus Ltd and DESS PSV Ltdissued additional share capital which was subscribed for fullyby the Company.

DESS Sea Eagle Ltd was established during the year.

Norwegian based companiesDeep Sea Supply AS and Deep Sea Supply Management AShave merged and as a consequence the share capital of the

new combined entity has been reduced. Deep Sea Supply ASno longer exists.

Brazilian based companiesThe Brazilian entity was established during 2009.

The Company owns 100% of the share capital and votingrights for all of its subsidiaries.

2009 2008

Financial assets at fair value through profit and lossListed securities - held-for-trading 0 6 335

The fair value for all equity securities is based on their current bid prices in an active market.

2009 2008

Cash at bank and in hand 299 8 750

Short-term bank deposits 0 0

Total bank deposits 299 8 750

The carrying amounts of cash approximate fair value. Currently there is no credit facility for the Company.

4. Investments in subsidiaries

5. Financial derivatives and assets at fair value through profit an loss

6. Cash and cash equivalents

75


Number of Sha-res (thousands)

Share Capital

Share premium

Other paid-in-equity Total

Opening balance as at 1 January 2008 131 965 2 639 190 334 231 193 204

Payment of dividend from share premium 0 -50 746 -50 746

Valuation of share option scheme 1 011 1 011

Cancelation of own shares (non traded) -2 000 -40 -40

At 31 December 2008 129 965 2 599 139 589 1 242 143 431

Opening balance as 1 January 2009 129 965 2 599 139 589 1 242 143 431

Valuation of share option scheme 478 478

As at 31 December 2009 129 965 2 599 139 589 1 720 143 909

The total authorised number of ordinary shares as per 31 December 2009 is 129.964.867 shares with a par value of USD 0.02per share, of which 3.101.000 shares are hold by the company. All issued shares are fully paid.

Share option scheme

Employees:The Board of Deep Sea Supply PLC has approved a shareoption scheme for all employees. 994,989 share options weregranted to management and employees of the Company byyear-end 2009,

During 2009 the Company decided to change both thenumber of shares and exercise price. The number of shareswas reduced by 33% and the exercise price changed to equalthe closing price on 13 March, 2009 increased by 10% orNOK 6.99 per share. These share options scheme may beexercised with one third after one, two and three years,respectively and all share options must be exercised within 5years. The strike price shall be reduced, on a USD for USDbasis, by the amount of all dividends declared by the Com-pany in the period from the date of grant until the date thesubsisting share options is exercised. Subsequent shareoptions have been granted to new employees based on thesame principle.

By year end 2009 the following share options weregranted to the employees and management of the company:


Board:During 2009 the share options granted to the board wasreduced by 1/3 and the exercise price was set to the closingprice on 13 March, 2009 increased by 10% or NOK 6.99 pershare. The share options granted were then reduced from900,000 to 600,000 (200,000 for the Chairman of the boardand 133,333 for each director). The number of directorsincluding the chairman increased in 2009 from 4 to 5.

By year end 2009, a total of NOK 733,332 share optionswere granted at the following (December 2009) exerciseprices


Change of controlThe share options for the board and the share options andcertain other benefits for the employees will come into effectat change of control in the Company (in excess of 30%).

7. Share Capital

76

The credit rating of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings (if available) or to historical information and counterparty default rates. The ratings for the banks where the Companyholds its cash are as follows:

For the year ended 31 December 2009:Credit Rating AmountA1 299Total 299

For the year ended 31 December 2008:Credit Rating AmountAA- 8 090A/A-1 660Total 8 750

CompanyLoans and

Receivables


lossAvailable for

sale Total

31 December 2008

Assets as per balance sheet

Financial assets at fair value through profit and loss 6 335 6 335

Trade and other instruments 175 642 175 642

Cash and cash equivalents 8 750 8 750

Total 184 392 6 335 - 190 727

Liabiliities at fair valuethrough the profit

and lossOther finan-cial liabilities Total

Liabilities as per balance sheet

Borrowings - -

Trade and other instruments - 167 346 167 346

Total - - 167 346 167 346

8a. Credit quality of financial assets

8b. Financial instruments by category

CompanyLoans and

Receivables


lossAvailable for

sale Total31 December 2009Assets as per balance sheetFinancial assets at fair value through profit and loss - - Trade and other instruments 8 141 8 141 Cash and cash equivalents 299 299 Total 8 439 - - 8 439

Liabiliities at fairvalue through theprofit and loss

Other finan-cial liabilities Total

Liabilities as per balance sheetBorrowings - - Trade and other instruments 768 768 Total - - 768 768

77


2009 2008

Trade payables 92 12

Other payables 0 14 527

Total 92 14 539

Fair value of trade and other payables equal their carrying amount.

2009 2008Change in value of financial derivatives 0 -3 357Change in financial assets at fair value through profit and loss 8 456 -8 192

8 456 -11 549

2009 2008Financial expenses -50 -4 955Financial expenses with related parties -154 -8 640Financial income 169 25Financial income with related parties 4 267 15 624Unrealized exchange gains/(losses) 2 965 -507

7 197 1 547

2009 2008Audit fees 171 142Consultancy fees 370 566Management fees from subsidiaries 1 496 2 212Other administration expenses 501 862

2 537 3 782

10. Other (losses)/gains - net

11. Finance income and expenses

12. Administrative expenses

9. Other short term payables

78

Amounts due from related parties

2009 2008

Deep Sea Supply AS 0 172 126

Deep Sea Supply Management AS 7 975 714

Deep Sea Supply Shipowning AS 150 2 802

Deep Sea Supply Management (Cyprus) Ltd 15 0

Total 8 141 175 642

The amounts are payable on demand and not secured.For the year ended 31 December 2008 interest rates was 8% per annum.For the year ended 31 December 2009 the interest rates were based on the underlying currency for each balance:

US Dollar LIBOR 1,25 %

Euro EURIBOR 1,25 %

Norwegian Kroner NIBOR 1,25 %

Great British Pound LIBOR 1,25 %

Amounts due to related parties

2009 2008

DESS Cyprus Ltd 0 74 937

DESS PSV Ltd 614 77 868

DESS Sea Eagle Ltd 1 0

Deep Sea Supply Servicos Maritimos Ltda 60 0

Total 676 152 805

Management feesFor 2009, the Company recognized management fees charged from subsidiaries that amount to USD 1,496(2008: USD 2,212)

Interest on intercompany balances

Remuneration to the boardSuggested remuneration to the Board in 2009 is USD 165 (NOK 0.95 mill), whereof USD 61 (NOK 0.35 mill) is suggestedto the Chairman. In 2008 payment to the Board was USD 152 (NOK 0.95 mill), whereof USD 56 (NOK 0.35 mill.) waspayment to the Chairman.

Interest on intercompany balances

2009 2008

Interest income 4 267 15 624

Interest expense -154 -8 640

Total 4 112 6 984

13. Related party transactions

79


There were no material events which occurred after the end of the financial year.

14. Related party transactions

(5)Board Members: Phidias K Pilides (CEO), Dinos N Papadopoulos (Deputy CEO), Panikos N Tsiailis, Christakis Santis, Stephos D Stephanides, Costas L Hadj iconstantinou, George Foradaris,Costas M Nicolaides, Angelos M Loizou, Vasilis Hadjivassiliou, Androulla S Pittas, Savvas C Michai l, Costas L Mavrocordatos, Christos M Themistocleous, Panicos Kaouris, Nicos A Neophytou,George M Loizou, Pantelis G Evangelou, Liakos M Theodorou, Stelios Constantinou, Tassos Procopiou, Andreas T Constantinides, Theo Parperis, Constantinos Constantinou, Petros C Petrakis,Philippos C Soseilos, Evgenios C Evgeniou, Christos Tsolakis, Nicos A Theodoulou, Nikos T Nikolaides, Cleo A Papadopoulou, Marios S Andreou, Nicos P Chimarides, Aram Tavitian,Constantinos Taliotis, Stavros A Kattamis, Yiangos A Kaponides, Tasos N Nolas, Chrysilios K Pelekanos, Eftychios Eftychiou, George C Lambrou, Chris Odysseos, Constantinos L Kapsalis, SteliosA Violaris, Antonis Hadjiloucas, Petros N MaroudiasDirectors of Operations: Androulla Aristidou, Achilleas Chrysanthou, George Skapoullaros, Demetris V Psaltis, George A Ioannou, George C Kazamias, Michael Kliriotis, Marios G Melanides,Sophie A Solomonidou, Yiannis Televantides, Antonis Christodoulides, Anna G Loizou

Offices: Nicosia, Limassol, Larnaca, Paphos PricewaterhouseCoopers Ltd is a private company,Registered in Cyprus (Reg. No. 143594)

PricewaterhouseCoopers Limited

City House6 Karaiskakis Street

Independent Auditor's ReportTo the Members of Deep Sea Supply Plc

CY-3032 Limassol

P O Box 53034

CY-3300 Limassol, Cyprus

Telephone: + 357 - 25555000

Facsimile: + 357 - 25555001

www.pwc.com/cy

Report on the Financial Statements

We have audited the accompanying financial statements of Deep Sea Supply Plc (the“Company”), on pages 64 to 79, which comprise the balance sheet as at 31 December2009, and the statements of income, comprehensive income, changes in equity and cashflows for the year then ended, and a summary of significant accounting policies and otherexplanatory notes.

We have reported separately on the consolidated financial statements of the Company andits subsidiaries for the year ended 31 December 2009 on 14 April 2010.

Board of Directors’ Responsibility for the Financial Statements

The Company’s Board of Directors is responsible for the preparation of financialstatements that give a true and fair view in accordance with International FinancialReporting Standards as adopted by the European Union (EU) and the requirements of theCyprus Companies Law, Cap. 113. This responsibility includes: designing, implementingand maintaining internal control relevant to the preparation and fair presentation of financialstatements that are free from material misstatement, whether due to fraud or error;selecting and applying appropriate accounting policies; and making accounting estimatesthat are reasonable in the circumstances.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on ouraudit. We conducted our audit in accordance with International Standards on Auditing.Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance whether the financial statements are free frommaterial misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor’sjudgment, including the assessment of the risks of material misstatement of the financialstatements, whether due to fraud or error. In making those risk assessments, the auditorconsiders internal control relevant to the entity's preparation of financial statements thatgive a true and fair view in order to design audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of theentity's internal control. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of accounting estimates made by theBoard of Directors, as well as evaluating the overall presentation of the financialstatements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion.

Opinion

In our opinion, the financial statements give a true and fair view of the financial position ofDeep Sea Supply Plc as at 31 December 2009, and of its financial performance and itscash flows for the year then ended in accordance with International Financial ReportingStandards as adopted by the EU and the requirements of the Cyprus Companies Law,Cap. 113.

Report on Other Legal and Regulatory Requirements

Pursuant to the requirements of the Cyprus Companies Law, Cap. 113, we report thefollowing:

We have obtained all the information and explanations we considered necessary forthe purposes of our audit.

In our opinion, proper books of account have been kept by the Company.

The Company's financial statements are in agreement with the books of account.

In our opinion and to the best of our information and according to the explanationsgiven to us, the financial statements give the information required by the CyprusCompanies Law, Cap. 113, in the manner so required.

In our opinion, the information given in the report of the Board of Directors isconsistent with the financial statements.

Pursuant to the requirements of the Directive DI190-2007-04 of the Cyprus Securities andExchange Commission, we report that a corporate governance statement has been madefor the information relating to paragraphs (a), (b), (c), (f) and (g) of article 5 of the saidDirective, and it forms a special part of the Report of the Board of Directors.

Other Matter

This report, including the opinion, has been prepared for and only for the Company’smembers as a body in accordance with Section 156 of the Cyprus Companies Law, Cap.113 and for no other purpose. We do not, in giving this opinion, accept or assumeresponsibility for any other purpose or to any other person to whose knowledge this reportmay come to.

PricewaterhouseCoopers LimitedChartered Accountants


84

‘The Company has in 2009

taken several initiatives

towards more environmentally

friendly vessels and made

significant investments to the

benefit of the environment’.

Deep Sea Supply Group

Contact information

www.deepseasupply.no

Cyprus

Deep Sea Supply Plc

John Kennedy Ave.

Iris House

7th Floor

Office no.740B

Limassol 3100

Cyprus

Deep Sea Supply Management (Cyprus) Ltd

Deana Beach Apts, Block 1, Flat 411

Promachon Elefterias Street Agios Athanasios 4013

Limassol

Cyprus

Postal address:

P.O. Box 53340

CY-3302 Limassol

Cyprus

Norway

Deep Sea Supply Management AS

Tromøyveien 22

4841 Arendal

Norway

Singapore

Deep Sea Supply

16 Raffles Quay

# 43-01 Hong Leong Building

Singapore 048581

Postal address:

PO Box 2844

Singapore 904844

annual report 2009

Documents

gross profit margin

operating profit margin

value adjusted equity

book equity margin

anoffshore supply company

ebitda margin

deep sea supply annual

strategythe company